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ENERGY NEWS
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MIDDLE EAST Energy Review By Tsvetana Paraskova
The decision of the OPEC+ group to reduce its crude oil production target and the US reaction to the move have been the leading stories in the Middle East’s oil and gas sector over the past month. Meanwhile, the biggest oil and gas producers in the Gulf moved to secure more contracts to expand drilling activity and increase production capacity.
OPEC+ Makes Largest Cut to Production Target Since 2020 The OPEC+ alliance announced in early October at its first in-person meeting since the pandemic started that it would reduce, starting November 2022, its overall crude oil production target by 2 million barrels per day (bpd) compared to the August 2022 required production levels. The OPEC+ meeting also granted the Joint Ministerial Monitoring Committee (JMMC) “the authority to hold additional meetings, or to request an OPEC and non-OPEC Ministerial Meeting at any time to address market developments if necessary.”
www.ogv.energy I November 2022
The decision to reduce production was taken “In light of the uncertainty that surrounds the global economic and oil market outlooks, and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive, and pre-emptive, which has been consistently adopted by OPEC and non-OPEC Participating Countries in the Declaration of Cooperation,” OPEC said at the end of the meeting.
The next OPEC+ ministerial meeting is scheduled to be held on 4 December 2022. While the headline reduction is a massive 2 million bpd, the actual cuts would be around 1 million bpd-1.1 million bpd, industry analysts say. The effective OPEC+ cut as of November will be mostly shouldered by OPEC’s top producer Saudi Arabia, which has been trying to produce to its quota so far. Saudi Arabia is set to reduce 526,000 bpd of crude oil output and will have a target of 10.478 million bpd. Russia has the same target, but it is already well below it, to the tune of around 500,000 bpd.
US Unhappy with OPEC+ Cuts The White House criticised the announced cuts, saying President Joe Biden “is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.” “In light of today’s action, the Biden Administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices,” US National Security Advisor Jake Sullivan and National Economic Council (NEC) Director Brian Deese said in a joint statement. “What we think is that this decision by OPEC+ is one purported self-interest — is a mistake and it’s misguided,” White House Press Secretary Karine Jean-Pierre said. A week later, President Biden told CNN in an exclusive interview that there would be some consequences for Saudi Arabia for its decision together with Russia to steer OPEC+ into a large oil production cut.
