OPEC, Russia Align on Oil Production Cut
Saudi Arabia and Russia have agreed to cut oil production in a bid to drive prices higher.
The two countries are the leaders of the OPEC Plus consortium, and the planned cuts are the biggest in over two years.
It's a counter-offensive to the American and European bids to generate lower gas prices at the pump and stop Russia from profiting from crude oil in the wake of its invasion of Ukraine.
U.S. President Joe Biden and European leaders have pushed for more oil production in order to achieve both goals.
The planned production cut of about two million barrels of crude oil per day comes out to about 2 percent of global oil production.
The White House has responded by accusing OPEC Plus of "aligning" with Russia. Saudi Arabia's decision will also put it at odds with the U.S., diplomatically speaking.
For its part, Saudi Arabia claims its acting ahead of an anticipated downward slide in the global economy that could lead to weakened demand for oil, and thus, lower prices.
As a result of the cut, the price of Brent crude -- the international standard -- rose by 1.5 percent.
The Biden administration is responding by ordering the release of 10 million barrels from the Strategic Petroleum Reserve. That follows earlier statements from the administration that it would not extend a six-month run of releasing one million extra barrels per day. That run was set to finish at the end of this month.
This all follows the announcement of a proposed plan championed by Biden and the European Union to cap the price of Russian oil.
Experts say that OPEC Plus countries often fall short of production quotas, so the actual cut may be more like one million barrels per day. They also point out that a slowing economy could still weaken demand so much that the cut doesn't matter -- prices could still come down.
We shall see what happens.
[Image: Shutterstock.com/Golden Dayz]
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