Wednesday, 30 November, 2022
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OPEC+ tipped to make big cut in oil output

OPEC+ tipped to make big cut in oil output

LONDON: Major oil-producing nations led by Saudi Arabia and Russia are expected to make this week their biggest output cut since the start of the Covid pandemic in efforts to buttress prices.

Energy prices soared after Russia invaded Ukraine earlier this year, pushing inflation to decades-high levels that have put pressure on economies across the world, reports AFP.

But crude prices have fallen in recent months on concerns over demand amid a slowdown in the global economy.

The 13 members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their 10 allies headed by Moscow will hold on Wednesday their first in-person meeting at the group's headquarters in Vienna since March 2020.

Collectively known as OPEC+, the alliance drastically slashed output by almost 10 million barrels per day in April 2020 to reverse a massive drop in crude prices caused by Covid lockdowns.

OPEC+ began to raise production last year after the market improved -- output returned to pre-pandemic levels this year, but only on paper as some members struggled to meet their quotas.

The group agreed last month on a slight cut of 100,000 bpd from October, the first in more than a year.

Analysts now expect OPEC+ to decide to take one million bpd out of the market from November at Wednesday's meeting.

"There's been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices," said Craig Erlam, analyst at trading platform OANDA.

"A sizeable cut now looks on the cards, the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn," he added.