OPEC+ Decides to Cut Production by 2 Million Barrels

Thursday, October 6, 2022

At the 33^rd OPEC and non-OPEC Ministerial Meeting held on October 5, the group of global oil producers decided to cut production output by two million barrels per day. The cuts, scheduled to come into effect in November, will likely push gasoline prices higher in an already pressured global economy.

The cuts are a slap in the face to the West who have lobbied for the group to maintain or increase production amid rising global commodity prices and the shortage of crude in the market with the sanctions on Russia curbing available supplies. Western leaders also believe it has undermined their effort to slow down Russia’s war against Ukrain, but higher prices could give Putin a boost in financing his war machine.

OPEC released a statement defending its position as follows:

“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, the Participating Countries decided to:

• Reaffirm the decision of the 10th OPEC and non-OPEC Ministerial Meeting on 12 April 2020 and further endorsed in subsequent meetings, including the 19th OPEC and non-OPEC Ministerial Meeting on 18 July 2021.
• Extend the duration of the Declaration of Cooperation until 31 December 2023.
• Adjust downward the overall production by 2 mb/d from the August 2022 required production levels, starting November 2022 for OPEC and non-OPEC Participating Countries as per the attached table.
• Reconfirm the baseline adjustment approved at the 19th OPEC and non-OPEC Ministerial Meeting.
• Adjust the frequency of the monthly meetings to become every two months for the Joint Ministerial Monitoring Committee (JMMC).
• Hold the OPEC and non-OPEC Ministerial Meeting (ONOMM) every six months in accordance with the ordinary OPEC scheduled conference.
• Grant the 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.
• Extend the compensation period to 31 March 2023. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.
• Reiterate the critical importance of adhering to full conformity.
• Hold the 34th OPEC and non-OPEC Ministerial Meeting on 4 December 2022.”

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