On Wednesday, the intergovernmental Organization of the Petroleum Exporting Countries (OPEC) agreed to implement the biggest cuts in international oil production since the start of the COVID-19 pandemic in 2020.
According to the Washington Free Beacon, OPEC’s decision in its Vienna meeting was made in defiance of the Biden Administration, which has urged the group to instead increase production in order to offset rising gas prices in the United States. OPEC ultimately came to its decision in an effort to curb supply and ultimately bring international oil prices back up, hoping that such a move might prevent a global recession.
However, the Biden Administration has repeatedly claimed, without evidence, that economic fundamentals do not support a cut in oil production, and instead insisted that increased production was the answer to the domestic gas price crisis.
“Higher oil prices, if driven by sizeable production cuts, would likely irritate the Biden Administration ahead of U.S. midterm elections,” said Citi analysts in response to the decision. “There could be further political reactions from the U.S., including additional releases of strategic stocks, along with some wildcards including further fostering of a NOPEC bill.”
Sources from OPEC claim that the agreed production cuts of 2 million bpd, which amounts to 2 percent of global demand, would come from existing baseline figures. This would also lead to a smaller impact overall as a result of the cuts, as OPEC’s August output had already fallen short of its target by about 3.6 million barrels per day.
Gas prices have been steadily rising in the United States since Biden took power in 2021, primarily as a result of the administration’s push for more “green energy” sources and actively cracking down on oil and other fossil fuels. The Biden Administration has forbidden any further oil and gas leases on federal lands, and has supported policies to ultimately ban gas-powered vehicles in the coming decades in favor of unproven and inefficient electric vehicles.
In response to the surge in gas prices in the summer of 2022, Biden announced the release of millions of barrels of oil from the Strategic Petroleum Reserve, an emergency stockpile that is generally reserved for national emergencies or wartime. Although the plan appeared to initially succeed in lowering prices, many had warned that the reduction in prices, like the solution itself, would be temporary. Biden’s previous efforts to find relief from foreign oil producers, such as Venezuela and Saudi Arabia, have failed.