OPEC, Announces Massive, Oil Production Cut.
On October 5, OPEC+ announced that it will cut oil production by 2 million barrels per day (BPD), the largest cut since the beginning of the COVID pandemic.
CNN reports the move threatens to raise the price of gasoline just weeks before crucial midterm elections in the United States.
The reduction equals approximately 2% of global oil demand.
Brent crude oil rose 1.5% to over $93 a barrel following the announcement.
The news also sent the price of U.S. oil up 1.7% to reach $88.
CNN reports that the production cuts will take effect in November prior to another OPEC+ meeting in December.
According to OPEC, the drastic reduction was made , βin light of the uncertainty that surrounds the global economic and oil market outlooks.β.
OPEC controls over 40% of global oil production.
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CNN points out that the impact of the cut may be limited, as OPEC has already been struggling to meet previous production targets.
An announced cut of any volume is unlikely to be fully implemented by all countries, as the group already lags 3 million BPD behind its stated production ceiling, Jorge Leon, Rystad Energy analyst, via CNN
