Oil Rallies As OPEC+ Agrees Historic 2 Million B/D Production Cut, Shuns Biden

As was well-telegraphed – and despite The White House’s sabre-rattling – OPEC+ JMMC has recommended the cartel to go ahead with a historic 2 million b/d production cut.

One delegate has confirmed this cut is from baseline levels. This means the production cut is less than 2 million b/d directly since current actual production levels are already below quota. However, it is still a sizable cut.

As ArgusMedia reports, the extent to which any cut to November quotas will reduce actual supply will depend on how OPEC+ members fare in meeting their targets this month and how the cut is distributed.

The group as a whole fell 3.58mn b/d below its collective ceiling in August, according to an average of secondary source estimates.

If agreed by ministers at their meeting in Vienna today, it will mark the biggest cut since the group reduced its collective quota by 9.7mn b/d during the early stages of the Covid crisis in 2020.

WTI is extending gains on the news, rallying back above $87 at 7-week highs…

This is not good news for the American consumer as gas prices are about to start accelerating again…

And that is not good news for President Biden’s approval rating…

We await The White House statement ‘mulling’ a reaction to this clear dissent of the unipolar order.

As we have detailed recently, this is a direct message to The Fed and The White House…

Food for thought…OPEC can cut more/longer than Biden administration can release from SPR. This OPEC meeting a wakeup call for US politicians that energy inflation is going to be STICKY.

— Dan Pickering (@pickeringenergy) October 5, 2022