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Marketwatch: Here’s what is really behind OPEC+ oil-production cuts, say energy analysts
An unexpected production cut announced on Sunday by OPEC+ oil producers complicates strained relations between the U.S. and Saudi Arabia, with investors seeing signs of geopolitical posturing in the decision.
However, some market analysts contend the cuts were less about sending a message to Washington and more about stabilizing oil prices amid fears of recession, as well as protecting the supply and demand balances.
Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries on Sunday announced they would slash a further combined 1.16 million barrels per day of oil production from May until the end of 2023. Russia, stinging from price caps and embargoes on its energy products as a result of its invasion of Ukraine, said it would extend its 500,000 barrel-a-day production cut through year-end. Together OPEC and its allies, led by Russia, make up the group known as OPEC+.
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WNU Editor: The US was caught completely off-guard by this OPEC+ decision to cut oil production. This is a surprise because China, India, and a few other big oil consumers were given a heads-up that this was going to happen.
I see this as another indication on how strained U.S. – Saudi ties have become, and how furious the Saudis are with the Biden administration’s determination to bring down the price of oil via through price caps and selling America’s strategic oil reserve on the open markets.
Bottom line.
Expect $100/barrel in the coming months, and a return to higher gas prices by this summer …. Gas prices will surge in coming weeks after OPEC cuts production, analysts say (FOX News).