OPEC+will meet Wednesday to consider cutting production by more than one million barrels of oil per day – a move that follows another cut a month earlier.
The group, made up of mainly middle-east, African, Central Asian, and Central American countries, will consider the massive output cut to combat the severe slide in the price of oil over the past four months.
The group will have to “decide how much firepower to deploy to staunch a sum-of-all-fears macro selloff that has caused crude to slide” below pre-Russian invasion of Ukraine levels, wrote Helima Croft, head of global commodity strategy and MENA research at RBC Capital Markets said in a note Wednesday.
Crude (WTI) has dropped from a high of $122.11 on June 8 to its Friday close at $79.74 and the trend is lower due to a lack of demand due to worsening global conditions and a very strong dollar.
At the Sept. 5 meeting, the group agreed to cut production by 100,000 barrels per day. The reduction has done nothing to stall crude’s epic slide.
This proposed cut may also not yield the price hike that Russia desperately needs and other members would like to see. Cutting the supply won’t increase demand in a recession nor will it weaken the greenback.
Saudi Arabia first signaled its desire for output cuts in August when prices were still above $90/bbl.
The meeting is set to take place Oct. 5 in Vienna.
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