The Organization of Petroleum Exporting Countries (OPEC) and its allies have agreed a small oil-production cut in October in a move aimed at stopping a slide in oil prices.
The oil producers in OPEC+, including Russia, will cut output by 100,000 barrels per day, OPEC+ said in a statement on September 5.
The decision amounts to only 0.1 percent of global demand, but it is the first cut in production in more than a year by OPEC+, a 23-member coalition that agreed to huge cuts in output in 2020, when the COVID-19 pandemic sent oil prices crashing.
OPEC+ began to increase production modestly again last year as the market improved. Prices surged almost $140 a barrel after Russia invaded Ukraine but have since dropped to about $95 on fears of an economic slowdown in the West.
Oil prices also have been dragged down by a potential boost in supply from Iran should it return to the broad market if a deal is reached on reviving the 2015 nuclear deal and sanctions are eased.
In a statement issued after the OPEC+ meeting, Iranian Minister of Petroleum Javad Owji said current market conditions needed “careful consideration” and that cooperation within the oil alliance was helping global consumers.
“We have always declared that we are ready to contribute to our role in the supply of oil and oil products and to improve energy security in the world by avoiding politicization of oil and the political use of energy,” he said.
The United States had pressed OPEC+ to increase output to help bring down energy prices that have fueled inflation there and in Europe.
U.S. President Joe Biden is committed to take all steps necessary to shore up energy supplies and lower prices, the White House said.
Biden “has been clear that energy supply should meet demand to support economic growth and lower prices for American consumers and consumers around the world,” White House spokeswoman Karine Jean-Pierre said in a statement.
“The president has taken action — including historic release of oil from U.S. and global strategic reserves and working with allies on a price cap on Russian oil to ensure we maintain a global supply of oil, even as we punish (President Vladimir) Putin for his action,” Jean-Pierre said.
The Group of Seven (G7) industrialized powers last week agreed to move toward capping the price of Russian oil in a bid to curb Moscow’s funding of its war in Ukraine.
Kremlin spokesman Dmitry Peskov said Russia would retaliate if G7 states imposed such a price cap. The cap has not been set, and its influence on the global price remains unclear.
Another factor that could influence the price of oil are EU sanctions aimed at blocking most Russian oil imports due to take effect at the end of the year.