Return to 1970s? Saudi-led OPEC+ deliberating further oil cuts amid Israel-Hamas war
Return to 1970s? Saudi-led OPEC+ deliberating further oil cuts amid Israel-Hamas war
Ahead of Organization of Petroleum Exporting Countries (OPEC+) meet in Vienna on November 26, Saudi Arabia is reportedly preparing to extend oil production cuts into 2024 as the bloc appears to ramp up its response to falling oil prices and regional tumult with larger geo-economic consequences amid Israel-Hamas war.
As of 2023, OPEC+ have 22 members which include 13 OPEC members (Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates, and Venezuela) and 9 Non-OPEC members including Russia, Mexico, Sudan, South Sudan, Azerbaijan and Kazakhstan. The Non-OPEC countries which exports Crude oil along with 13 opec members are termed as OPEC+ countries.
Earlier this week on Thursday (Nov 16), the oil prices slumped to their lowest since July, reflecting the pressure on OPEC+ group to consider further steps — extend or deepen — over their daily oil production capabilities.
Brent crude, the conventional international oil benchmark dropped 5.2 per cent on Thursday (Nov 16) as the prices went under $77 per barrel. Besides, in the backdrop of Russian offensive in Ukraine launched in February 2022, the crude oil price cap has been imposed at $60 per barrel for Russian oil exports, a benchmark Moscow has managed to evade.
After the oil prices hit a four-month low of $77 a barrel this week, Financial Times cited four people familiar with the Saudi government’s thinking to add that OPEC+ was highly likely to extend its 1mn barrel-a-day cut at least until the spring next year.
Why the Saudi-led OPEC+ is considering the oil cuts?
The primary cause is the oil price drop. But the OPEC+ members are also reportedly incensed over Israel-Hamas war and unprecedented humanitarian crisis that has gripped Gaza Strip, one of the world’s most densely populated regions.
Kuwait, Algeria and Iran are among the OPEC+ members most agitated by the conflict, Financial Times reported.
“You should not underestimate the level of anger there is and the pressure leaders in the Gulf feel from their populations to be seen to respond in some manner,” a person close to senior OPEC figures in West Asia was quoted as saying by the publication.
While there won’t be a repeat of the oil shock of the 1970s when the West Asian states halted oil exports to the West.
But, the person cited by the Financial Times further added: “People have become complacent about the potential to tighten oil supplies to send a subtle message, which will be well understood both in the streets and Washington DC.”
(With inputs from WION)
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