Tech Revolution: OPEC Just Announced Deeper Oil Cuts that are Set to Destroy the Global Market


Tech Revolution
Dec 3, 2022

Extra steps will almost certainly be taken by a coalition of the world’s most influential oil producers.

According to Goldman Sachs, their goal is to restore equilibrium to the market and prevent a further decrease in prices. On December 4, OPEC and non-OPEC producers will for an important energy alliance meeting known as OPEC+.

And they’ll be in charge of determining the course of action for production in the future. China from further Covid-19 restrictions, and as traders weigh the potential effects of a Western embargo on Russian oil. Recently, Goldman Sachs’ global head of commodities, Jeff Currie, said that the firm had lowered its oil price predictions due to several variables.

And ahead of its meeting, OPEC+ announced deeper oil hikes that are set to destroy the US and the entire global market!

So that we’re all on the same page, the Organization of the Petroleum Exporting Countries is a cartel comprised of many of the world’s major oil-producing countries.

In 2016, OPEC came together with several other major oil-exporting nations that were not members of OPEC to form a more formidable organization that they dubbed OPEC+. And the primary objective of the cartel is to maintain a stable price for crude oil, which is a valuable fossil fuel.

OPEC and its allies control approximately 90 percent of its discovered oil reserves. And because it holds such a dominant market share, the alliance is in a position to significantly impact the price of oil, at least in the near term.


The ability of OPEC+ to influence oil prices over the long term is hampered by the fact that individual countries have different priorities than the organization as a whole.

At their upcoming meeting this weekend, OPEC and its allies are likely to discuss the possibility of further reducing production. And this will be in response to the falling oil price on the global market.

Traders were taken aback when Saudi Arabia and its partners announced a cutback in production of two million barrels per day the previous month. And President Joe Biden voiced his strong disapproval of this action. Even so, prices have already fallen.

It momentarily reached a low of approximately US$80 per barrel in London as the situation in China continued to deteriorate. Up until this week, the organization’s representatives had issued a gloomy forecast. They even projected that they would wait to analyze the impact of the reductions.

However, now they are suggesting that even further reductions might be possible.

Before the summit on December 4, there had been no formal conversations held among the alliance’s members. On the other hand, the fact that OPEC+ has chosen to hold its meeting virtually on December 4 indicates a low likelihood of a shift in policy.

Before the meeting, Riyadh transmitted an unusually clear pre-meeting signal to the market. Last week, the Energy Minister of Saudi Arabia, Prince Abdulaziz bin Salman, announced that OPEC and its allies were “ready to act.” And if they believed it necessary to intervene and reduce supplies even further to “balance supply and demand,” they would do so.


Amrita Sen is the principal oil analyst at the consultancy Energy Aspects Ltd and also helped found the company. He believes that OPEC will decide between a rollover and additional production cuts. He further said that they “are constantly careful about supply-demand balances.”

Bloomberg polled 16 market participants and experts this week and expected a reduction in supply. And as for predictions, they can be anything from a quarter of a million to two million barrels each day.

FGE Consulting also estimates that the potential reduction might be rather large. It would appear that OPEC and its allies are concerned only with potential threats to the market’s decline.

Of course, there are other factors that work against this. Recent hints of the group’s preparedness to act have bolstered futures, and Brent has risen as high as 3.4% to US$86 per barrel. Now, the alliance is under constant pressure from consuming countries to keep the taps open to halting inflation.

In particular, deeper reductions might worsen the tension between the Biden administration and Saudi Arabia.


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