Crude Oil: OPEC+ decides to cut production sharply
2022-10-07
■ OPEC+ decided to cut production sharply
■ Although the impact on oil supply and demand is limited in the short term, but still need to keep an eye on the pace of production cuts going forward
OPEC+, which consists of OPEC members and non-member oil producers such as Russia, held a ministerial meeting on May 5 and agreed to reduce its production quota by 2 million bpd to 41.85 million bpd from November. At the meeting of September , the decision to reduce the production quota in October by 100,000 bpd gave an impression of a shift from increased to reduced production, but only a small reduction was made out of consideration for oil importers. 今The decision is seen as accelerating the pace of production cuts and preparing for the risk of lower oil prices due to falling oil demand.OPEC+ said in a statement that the decision was made in light of uncertainty about the global economy and the outlook for oil markets, as well as the need to strengthen long-term guidance for oil markets. The policy is likely to prioritize maintaining oil prices, which could further increase the persistence of inflationary pressures in oil-importing countries.
OPEC+'s decision is expected to have little impact on oil supply and demand in the short term. According to the International Energy Agency (IEA) monthly report for September, OPEC+ (excluding Iran, Libya and Venezuela) produced 40.38 million barrels per day in August, 3.47 million barrels per day less than the production target (43.85 million barrels per day), and production performance did not keep pace with production quotas. Production quotas have not kept pace with actual production. The impact of the production cut decision on near-term production is likely to be limited, with only an announcement effect, alerting the market to falling demand and sliding oil prices. However, if the pace of future production cuts accelerates, production quotas and production performance will balance out. Further production cuts could have an impact on oil supply and demand, making it necessary to closely monitor developments in OPEC member countries. The next OPEC+ ministerial meeting is scheduled for Dec. 4.