Fears of increased global oil prices as OPEC+ decides to cut oil production

The shadow wars being waged by rich countries to suit them are crushing the poorer countries that are already facing food shortage and famine due to Russia and NATO confrontation in Ukraine.

OPEC
(©gumpapa/stock.adobe.com) stock-OPEC-01-adobe OPEC logo and silhouette industrial oil pump jack on rustic blue background

In a summit held at Vienna on Wednesday, OPEC+ countries have decided to cut 2 million barrels per day in oil production from November. This has the potential to escalate the shadow wars over global oil prices.

The global oil markets were already under stress due to existing American sanctions on Venezuela, and Iran, and the newly imposed sanctions against Russia due to its military confrontation in the Ukraine war. This collective decision by Saudi and Russia is about to trigger the immediate rise of prices in global oil markets.

A 2 million barrels per day cut represents 2% less oil in the global supply chain. This decision comes at a juncture when Europe especially Germany is facing a severe energy crisis due to sanctions on Russian oil on which it is heavily dependent.  Some European countries have already begun to ration energy supply with fast approaching winter.

OPEC+ refers to the 13 members of the Organization of Petroleum Exporting Countries (OPEC) and 11 other non-OPEC members including Russia. OPEC holds 80.4% of the world’s proven oil reserves, while 11 non-OPEC nations represent 9.7% of proven oil reserves. Together they have the capability to disrupt or enhance the supply of crude oil on a global scale. This decision is said to be jointly taken by Saudi Arabia and Russia against the rules dictated by America. America due to its shale fracking is rising as a global energy powerhouse and is trying to sell its oil to Europe at 8 to 10 times higher.

The move to cut oil production by OPEC+ has been termed as shortsighted by the west and the US administration. The west and especially America is accusing OPEC of Aligning itself with Russia and weaponizing Oil. This decision of Saudi to defy America’s orders is also seen as Saudi asserting itself in spite of being a staunch American ally in the middle east. This also foils America’s plan to price cap Russian Oil and sell its own oil to Europe at exorbitant prices due to the Ukraine Crisis. On September 27th the two main undersea gas pipelines to Germany and Europe- Nord Stream 1 and Nord Stream 2 were blown in the Baltic sea in an alleged sabotage attempt. Now it only remains to see what course of action will America take against the OPEC decision.

India is enjoying a record low price oil supply from its traditional ally Russiain spite of sanctions against it. The current NDA government has been selling oil to its citizens at higher prices compared to the same price dynamics during the previous UPA regime. America recently sanctioned an Indian firm trading with Iranian petrochemicals. All the signs indicate the volatility and unpredictability of International oil markets and the geopolitics associated with them. The shadow wars being waged by rich countries to suit them are crushing the poorer countries which are already facing food shortage and famine due to Russia and NATO confrontation in Ukraine.

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