OPEC+ heads for deep supply cuts, clash with U.S.

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VIENNA/LONDON, Oct. 5 (Reuters) – OPEC+ looks set to slacken its oil production targets when it meets on Wednesday, limiting supply in an already tight market, despite pressure from the United States and others to more to pump.

The potential cut in OPEC+ could lead to a recovery in oil prices, which fell to about $90 from $120 three months ago, amid fears of a global economic recession, rising US interest rates and a stronger dollar.

OPEC+, which includes Saudi Arabia and Russia, is working on cuts of 1-2 million barrels per day, sources told Reuters, with several sources saying the cuts could be closer to 2 million.

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The United States is urging OPEC not to proceed with the austerity measures, arguing that the fundamentals do not support them, a source familiar with the matter said. read more

Sources said it remained unclear whether cuts could include additional voluntary cuts by members like Saudi Arabia or whether cuts could include existing underproduction by the group.

OPEC+ fell about 3.6 million barrels per day below its production target in August.

WASHINGTON RESPONSE

Higher oil prices, if driven by sharp production cuts,

would likely annoy the Biden administration in the run-up to the US midterm elections,” Citi analysts said in a note.

“There could be further political responses from the US, including additional release of strategic stocks and some wildcards, including further promotion of a NOPEC law,” Citi said, citing a US antitrust law against OPEC.

JP Morgan also said it expected Washington to take countermeasures by releasing more oil reserves.

Saudi Arabia and other members of OPEC+ — which groups the Organization of the Petroleum Exporting Countries and other producers, including Russia — have said they want to avoid volatility rather than target a particular oil price. read more

Benchmarked Brent crude traded just below $92 a barrel on Wednesday, after rising on Tuesday.

The West has accused Russia of arming energy, sparking a crisis in Europe that could lead to gas and electricity rationing this winter.

Moscow accuses the West of weaponizing the dollar and financial systems like SWIFT in retaliation for Russia sending troops to Ukraine in February. The West accuses Moscow of invading Ukraine, while Russia calls it a special military operation.

Part of the reason Washington wants lower oil prices is to deprive Moscow of its oil revenues, while Saudi Arabia has not condemned Moscow’s actions.

Relations are tense between the kingdom and the government of Biden, who traveled to Riyadh this year but failed to secure solid energy cooperation commitments.

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Editing by David Gregorio and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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