OPEC+ Fires Off a Big Cut – Why the U.S. is Upset
Yesterday in Vienna, the OPEC+ coalition tossed in a hefty production cut that sent shock waves through the oil market. Two million barrels per day (bpd)—a tidy 2% of global supply—was dialed back, and folks on the other side of the Atlantic weren’t exactly thrilled.
What the Bombshell Is
- OPEC+ decided to slash output by 2 m bpd.
- The move tightens supply, nudging prices higher.
- Sweden/UK, the White House…all have eyebrows raised.
Saudi’s Defense
Saudi Arabia, the de‑facto OPEC+ skipper, insisted the cut was a careful response to Western interest‑rate hikes and a warming global economy.
They brushed off whispers of collusion with Russia by saying the West over‑reacts out of “wealth arrogance.” In hindsight, that’s a pretty bold claim for an oil-loving nation.
Biden’s Response
President Joe Biden voiced disappointment, calling the decision “short‑sighted.” He’s currently weighing whether to pull government oil reserves to give the market a breathing space.
Notably, Biden still needs to appease his own budget‑tight, inflation‑hungry voters with lower fuel costs. Even if it means nudging a friendly note to Saudi, he’s hoping the cut won’t backfire on U.S. politics.
The Economic Backdrop
Oil prices have dipped from about $120 to $90 in just three months, thanks to fears of a recession, higher U.S. rates, and a stronger dollar. The supply cuts may turn the tide, pushing the market back up.
Looking Ahead
- Strategic Stockpiles: Biden might pull oil from reserves to cool prices.
- Saudi Energy Minister Abdulaziz bin Salman highlighted the need for proactive moves against inflation.
- Washington seeks lower oil to limit Moscow’s earnings from the Ukrainian war.
- Relations remain frosty—Saudi has yet to issue a burn‑brand message to Moscow over Ukraine.
Bottom line: OPEC+ is tightening the oil belt in a tense market, while the U.S. tries to keep the price string from snapping. Good luck to both sides—it’s a real middle‑east puzzle with a few more sides to the Rubik’s cube.
Lower real cuts
OPEC+ Slashes Production, While Russia & the West Trade Energy Sword‑Swaps
June 12th Snapshot
Mid‑week, the big oil players in OPEC+ cut production by about two million barrels per day (bpd), but the reality on the ground is a bit more nuanced.
Why? In August the group fell roughly 3.6 million bpd short of its target because of sanctions on places like Russia, Venezuela, and Iran, plus supply hiccups in Nigeria and Angola. Those numbers set the stage for less aggressive cuts.
According to Prince Abdulaziz, the real cut is closer to just 1 to 1.1 million bpd. Some analysts weighed in: Jefferies pegged it at 0.9 million bpd, while Goldman Sachs put it even lower—0.4 to 0.6 million bpd. They suspect most of the trimming will come from Gulf stalwarts such as Saudi Arabia, Iraq, UAE, and Kuwait.
- Jefferies: 0.9 million bpd
- Goldman Sachs: 0.4‑0.6 million bpd
- Prince Abdulaziz: 1‑1.1 million bpd
Brent’s Blaze
Benchmark Brent crude skirted above the $93/barrel mark— S$132—which sent a ripple through the market. This kind of uptick is the kind of buzz that turns everyday commuters into “oil market thrill‑seekers.”
The Energy Showdown
Across the Atlantic, the West is shouting that Russia is weaponising energy, citing soaring gas prices and a scramble to find alternatives. Europe is bracing for a winter that could see gas and power rationing, and the stakes are no small drama.
Meanwhile, Moscow says the folks up North are doing the same—weaponising the dollar and using systems like Swift in retaliation for Russia’s step into Ukraine back in February.
Inside the Kremlin
Russian Deputy Prime Minister Alexander Novak—recently flagged on the U.S. special designated nationals sanctions list—made a visit to Vienna. Unlike in the EU, Novak is unfettered by sanctions, even though he and other OPEC+ members signed a deal to extend cooperation until the end of 2023.
Looking Ahead
Mark your calendars! The next OPEC+ meeting is slated for December 4th. Big change on the horizon: four monthly meetings will become bi‑annual sessions— because who has time for monthly grind when you’re pumping oil, right?
Quick Take
- OPEC+ cuts production: 1‑2 million bpd (real day‑to‑day cuts likely lower)
- Brent crude edges past $93/barrel
- West sees energy as a weapon, Russia counters with financial tools
- Future OPEC+ meeting: December 4th, bi‑annual format
