OPEC+ recently confirmed a series of oil production cuts, a decision that has sparked concerns of supply shortages on the U.S. administration’s behalf as the group deems it “shortsighted,” Reuters reported.
“The kingdom rebuffed criticism it was colluding with Russia, which is included in the OPEC+ group, to drive prices higher and said the West was often driven by 'wealth arrogance' when criticizing the group,” a recent Reuters report states.
According to OPEC's de-facto leader, Saudi Arabia measured the cuts to be 2 million barrels per day (bpd), equating to 2% of the global supply. The speaker deemed the sum necessary to counter rising Western interest rates, and the weakening state of the global economy.
The White House recently responded to the decision, stating that President Joe biden continues considering the release of strategic oil stocks to control price increases.
"The president is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine," the White House said.
The rise in inflation has tarnished Biden’s midterm election approval ratings, and resulted in requests for Saudi Arabia to reduce prices.
According to U.S. officials, lowering oil prices would serve as a strategy to reduce Moscow’s oil revenue. The cuts would help recover from losses after oil prices that saw a dramatic decline to about $90 from $120 three months ago.
“Biden traveled to Riyadh this year but failed to secure any firm cooperation commitments on energy,” the Reuters report continues. “Relations have been further strained as Saudi Arabia has not condemned Moscow's actions in Ukraine.”
Production shortages became inevitable after Western sanctions were imposed on Russia, Venezuela and Iran. The shortages also correlate with output production problems in Nigeria and Angola.
According to Prince Abdulaziz bin Salman Al-Saud, the real cuts will measure around 1.0-1.1 million bpd. More determinations will be made at the next OPEC+ meeting, scheduled for Dec. 4, and other recurring monthly meetings after that.