The OPEC+ alliance of oil exporting countries has decided to drastically cut production. This move will deal a heavy blow to the global economy and lead to higher fuel prices in almost all countries of the world.
From November 2022, daily production will be reduced by 2 million barrels. This decision was explained by “the uncertainty surrounding the outlook for the global economy and the oil market.” Saudi Energy Minister Abdulaziz bin Salman emphasized the alliance’s role as a guarantor of energy market stability.
Despite the impending shortage of oil, it is trading well below summer prices on fears that the US or Europe will plunge into recession due to high inflation. In this case, fuel consumption will decrease and there will be no shortage.
“This decision will have the most negative impact on low- and middle-income countries already suffering from higher energy prices,” the White House said in a statement.
Oil stocks could shrink in the coming months, with a European ban on most Russian imports coming into effect in December. The imposition of restrictive oil prices by Western states could lead to the halting of the supply of “black gold” to countries that will abide by this agreement.
In such a situation (decrease in oil production and the inability to supply it at a price higher than the established limit), oil will quickly rise in price and price constraints will not be able to control the growth of its costs. In some markets, not only a deficit is formed, but also a complete absence of oil and oil products.
But not in Russia. Recall that in our country there is a downer – compensation for oil companies for lost profits on the sale of oil and fuel, not abroad, but in the domestic market. The coefficient of this damper has been adjusted this summer and will remain in this form until the end of the year. By then, it can be adjusted again if necessary, depending on the international situation.