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OPEC+ agrees to cuts in oil production despite pressure from U.S.

FAUlty Gator

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Oct 27, 2017
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VIENNA/LONDON (Reuters) - OPEC+ agreed its deepest cuts to oil production since the 2020 COVID pandemic at a Vienna meeting on Wednesday, curbing supply in an already tight market despite pressure from the United States and others to pump more.

The cut could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising U.S. interest rates and a stronger dollar.

The United States had pushed OPEC not to proceed with the cuts, arguing that fundamentals don't support them, a source familiar with the matter said.
Sources said it remained unclear if cuts could include additional voluntary reductions by members such as Saudi Arabia, or if they could include existing under-production by the group.
OPEC+ fell about 3.6 million barrels per day short of its output target in August.
"Higher oil prices, if driven by sizeable production cuts, would likely irritate the Biden Administration ahead of U.S. mid-term elections," Citi analysts said in a note.
"There could be further political reactions from the U.S., including additional releases of strategic stocks, along with some wildcards including further fostering of a NOPEC bill," Citi said, referring to a U.S. antitrust bill against OPEC.


JPMorgan also said it expected Washington to put in place countermeasures by releasing more oil stocks.
OIL PRICES RISE
Saudi Arabia and other members of OPEC+ - which groups the Organization of the Petroleum Exporting Countries and other producers including Russia - have said they seek to prevent volatility rather than to target a particular oil price.
Benchmark Brent crude rose towards $93 per barrel on Wednesday, after climbing on Tuesday.

The West has accused Russia of weaponising energy, creating a crisis in Europe that could trigger gas and power rationing this winter.
Moscow accuses the West of weaponising the dollar and financial systems such as SWIFT in retaliation for Russia sending troops into Ukraine in February.
 
The cut will be double what was anticipated - now 2 million barrels per day. Coming as Biden emphasized an end to tapping the strategic reserves at 1 million barrels per day.

One has to wonder about the discussion going on between OPEC+ members, and their motivation. Despite Biden's pandering, the Saudis don't like him.

This won't help with inflation, and the Fed raising interest rates won't solve this factor.
 
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CNN obtained some of the draft talking points circulated by the White House to the Treasury Department this week and called the prospect of a production cut a "total disaster" and "hostile act."

"There could be further political reactions from the US, including additional releases of strategic stocks," the strategists added. They said the Biden administration could also push forward with an anti-trust bill targeting OPEC.

But that's not all. According to Bloomberg, White House officials are discussing possible export bans on gasoline, diesel, and other refined petroleum with the Energy Department.

People familiar with discussions said administration officials are discussing export bans of refined products with top oil industry leaders as the risk of an OPEC+ reduction could catapult fuel pump prices higher aheadof the midterm elections in November.

And given the resurgence in crude and wholesale gasoline prices, regular pump prices are set to soar again...



Despite Biden's SPR drain, hitting levels not seen since 1984, the export ban could be the most controversial move yet by the desperate administration to tame pump prices ahead of the midterm elections next month.



Biden's political emptying of the SPR has left it with a record low of just 22 days of supply...



Top oil execs and industry experts have blasted the proposed export ban, saying it could backfire and result in even higher gasoline, diesel, and jet fuel prices, while throwing energy markets into turmoil in Europe ahead of winter.

In a letter to the Energy Department, Exxon's CEO Darren Woods wrote last week that "continuing current Gulf Coast exports is essential to efficiently rebalance markets—particularly with diverted Russian supplies."

On Tuesday, the American Petroleum Institute warned any attempt to ban exports will disrupt not just global markets but harm US national security and geopolitical standing. API continued:

Banning or limiting the export of refined products would likely decrease inventory levels, reduce domestic refining capacity, put upward pressure on consumer fuel prices, and alienate US allies during a time of war. For these reasons, we urge the Biden administration to take this option off the table and focus instead on working with us on policies that will strengthen US energy security and protect consumers.
API outlined the major points from a July study via the American Council for Capital Formation about the economic impacts of a potential export ban of refined products:

1. An export ban could result in the shuttering of an estimated 1.3 million barrels per day of US refining capacity (7% of US total) due to trapped refinery production in the Gulf Coast. The loss of this capacity would likely strand a surplus of crude oil in the Central United States, halting important upstream energy production.

2. An export ban could result in higher product prices for US fuel consumers, with more than two-thirds likely to experience price increases of more than 15 cents per gallon for gasoline and 45 cents per gallon for distillates.

3. An export ban could cause a net loss to US GDP of more than $44 billion in 2023.

4. An export ban could eliminate 85,000 jobs this year and 35,000 job losses during 2023.

"There simply is not sufficient pipeline connectivity or the range of economic shipping alternatives that would be required to transport significantly more fuel to the East Coast from refineries in the Gulf, API continued, adding, "Banning exports of fuel from the United States will not eliminate this challenge or make it easier and more affordable to supply American-refined fuel to the East Coast. Instead, by cutting into global fuel supplies, it would likely raise the cost of fuel imported into the East Coast from the global market."
 
Why would the Saudis like Biden, when he basically treats them like shit except during the occasional moments when he needs their help?,.. not surprising.
Because the Saudis are a huge pile of SHIT, and always have been.
 
**** the Saudis. The sooner the US can move alway from their oil the better
That isn't the issue....it's Saudi and OPEC+ influence on the World Oil Market. Like it or not they'll have heavy influence on the World economy for the foreseeable future. Sucks but it is what it is.
 
Communist Russia and Joseph Stalin were much larger piles of excrement and we chose to fight WWII with them...
We were on the same side because Hitler was dumb.

French and British damn near ended up in a shooting war with the Soviets in Finland before WW2 started proper.


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Don't know why this admin can't just get over themselves and turn American oil production loose. Hell, incentivize domestic production by any means. At the same time use federal gas tax funds to develop the EV technology and infrastructure.

Point I have been saying all along is we can do both at the same time so as not to be beholden to foreign whims. Biden seems to think the only way to Green Energy is to strangle fossil fuels. We can do both.
 
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Don't know why this admin can't just get over themselves and turn American oil production loose. Hell, incentivize domestic production by any means. At the same time use federal gas tax funds to develop the EV technology and infrastructure.

Point I have been saying all along is we can do both at the same time so as not to be beholden to foreign whims. Biden seems to think the only way to Green Energy is to strangle fossil fuels. We can do both.
Agree…we can do both. The less reliance the rest of the world has on OPEC/Russia the better.

Oil is going to be a hot commodity for the foreseeable future no matter what we do.
 
Don't know why this admin can't just get over themselves and turn American oil production loose. Hell, incentivize domestic production by any means. At the same time use federal gas tax funds to develop the EV technology and infrastructure.

Point I have been saying all along is we can do both at the same time so as not to be beholden to foreign whims. Biden seems to think the only way to Green Energy is to strangle fossil fuels. We can do both.
We would need to leave the global market though. Which I am not sure is a bad thing.
 
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Don't know why this admin can't just get over themselves and turn American oil production loose. Hell, incentivize domestic production by any means. At the same time use federal gas tax funds to develop the EV technology and infrastructure.

Point I have been saying all along is we can do both at the same time so as not to be beholden to foreign whims. Biden seems to think the only way to Green Energy is to strangle fossil fuels. We can do both.
Ok, but what are the specific reasons domestic production can’t ramp up right now if the oil companies wanted to? (Genuinely asking, not a gotcha)
 
Don't know why this admin can't just get over themselves and turn American oil production loose. Hell, incentivize domestic production by any means. At the same time use federal gas tax funds to develop the EV technology and infrastructure.

Point I have been saying all along is we can do both at the same time so as not to be beholden to foreign whims. Biden seems to think the only way to Green Energy is to strangle fossil fuels. We can do both.
The US is on pace to produce nearly 12 million barrels a day in 2022 and close to 13 million in 2023. The highest production ever was in 2019 at 12.3 million. We are at peak production.
 
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The US is on pace to produce nearly 12 million barrels a day in 2022 and close to 13 million in 2023. The highest production ever was in 2019 at 12.3 million. We are at peak production.
Remember ‘peak oil’ in the U.S. was 9 million barrels in 1985.
By 2007 that was down to just over 5 million.
 
That isn't the issue....it's Saudi and OPEC+ influence on the World Oil Market. Like it or not they'll have heavy influence on the World economy for the foreseeable future. Sucks but it is what it is.
We need to produce all the shale oil we can manage and sell it into the world marketplace ... at the new and ever higher prices. We should even sell whatever we can from the Strategic Petroleum Reserve; take that puppy down to empty and build condominiums over it. (After the EPA and the BLM do their thing to certify the area free of pollutants) We can take the increased tax revenues from these sales and apply it to balancing our books at a national level.

........................................................

I do not understand this: We have caused world oil prices to soar and the least we can do is take advantage of a perfect opportunity to price gouge the rest of the World. Sell every drop of oil we can create into the coming price wave.

This is all on us, and rest assured that Putin's (Future) Ghost and Stalin's Ghost are flabbergasted that we are not hitting every bid for oil in every oil market in every country in the World. This is nonsense. It appears that the U.S. is attempting to ride it out. Yikes! ... and Holy Yikes!

............................

The only explanation I can come up with is that our esteemed government is packed with idiots and does not have a clue as to what is going on.
 
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We need to produce all the shale oil we can manage and sell it into the world marketplace ... at the new and ever higher prices. We should even sell whatever we can from the Strategic Petroleum Reserve; take that puppy down to empty and build condominiums over it. We can take the increased tax revenues from these sales and apply it to balancing our books at a national level.

........................................................

I do not understand this: We have caused world oil prices to soar and the least we can do is take advantage of a perfect opportunity to price gouge. Sell every drop of oil we can create into the coming price wave.

This is all on us, and rest assured that Putin's (Future) Ghost and Stalin's Ghost are flabbergasted that we are not cashing in our chips. This is nonsense. It appears that the U.S. is attempting to ride it out. Yikes! ... and Holy Yikes!

............................

The only explanation I can come up with is that our esteemed government is packed with idiots and does not have a clue as to what is going on.
They aren't replenishing the SPR if that is any indication. You should make people think with this post.
 
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How does domestic oil help chit unless we nationalize the oil in the ground, nationalize the refineries and delivery, and institute price controls and rationing?
 
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