OPEC+, a group of oil-producing countries such as Saudi Arabia, is reportedly considering additional production cuts to respond to falling oil prices and express anger over the “Gaza War.”
The Financial Times reported on the 18th (local time) that Opec+ will consider additional production cuts and extension of production cuts due to the recent fall in oil prices and anger over the ongoing Israel-Hamas war. Citing sources, the newspaper said that Opec+ was “shocked” by the Gaza war and raised the issue of an additional 1 million barrels per day production cuts. In particular, Kuwait, Algeria, and Iran were greatly stimulated by the war. Saudi Arabia is also reportedly preparing to extend its 1 million-barrel daily production cut, which was scheduled to end at the end of this year, until next spring.
The newspaper said that while oil prices are a basic driver for OPEC members, including Saudi Arabia, to consider further production cuts, anger over the humanitarian crisis in Gaza caused by Israel’s attacks is also at play. The price of oil hit a four-month low of $77 a barrel last week.
After deciding to cut production by 2 million barrels per day in October 2022, OPEC+ has so far increased its production cuts to 3.66 million barrels per day. Separately, Saudi Arabia decided in June to cut production by an additional 1 million barrels per day and extended it in September. Oil prices temporarily rose as a result of OPEC+’s decision, but they fell again due to concerns over a global economic downturn.
“The level of anger within Opec+ should not be ignored, and leaders of Gulf states are feeling pressure from residents to respond in any form,” said a senior Opec+ official. Saudi Arabia’s Energy Minister Abdulaziz bin Salman has recently criticized hedge funds betting on falling oil prices, hinting that they will not sit idly by. Analysts expect Saudi Arabia to threaten to sacrifice other member states by increasing production first if other countries do not comply as Minister Abdulazir pushes for additional production cuts. Saudi Crown Prince Muhammad bin Salman insists the price of oil should be $100 a barrel.