Home / Industry / Energy /  OPEC+ to cut production by 2 million bpd, oil prices surge

NEW DELHI : The Organization of the Petroleum Exporting Countries (OPEC) and other major oil producing countries have agreed to cut production by 2 million barrels per day (bpd).

The decision was taken at the 33rd OPEC and Non-OPEC Ministerial Meeting which took place in person at the OPEC Secretariat in Vienna, Austria. The production cut would come into effect in November.

Although anticipated, the quantum of production cut is way higher than the market expectations. Anticipations were  that the cartel would adopt a cut of 1 million barrels per day. This is the largest production cut since the start of the pandemic.

A statement from OPEC said that in the meeting it was decided to “adjust downward the overall production by 2 mb/d (million barrels per day), from the August 2022 required production levels, starting November 2022 for OPEC and non-OPEC participating countries".

It noted that decision has been 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.

Since June, international oil prices largely declined amid concerns of a global recession and interest rate hikes by central banks.

The group, known as ‘OPEC+’, comprising of Saudi Arabia, and non-OPEC oil exporters including Russia, defied the pressure from the US to raise production.

The decision has resulted in a surge in oil prices. At 10.10 pm, the December contract of Brent on the Intercontinental Exchange was trading at $93.06, higher by 1.37% from its previous close. The November contract of West Texas Intermediate (WTI) rose 1.03% to $87.41 a barrel.

Last month, OPEC announced to slash oil production targets for October by 100,000 barrels per day after the cartel agreed to increase the production by the same quantum in September.

OPEC+ will next hold its ministerial meeting on December 4.

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