Further OPEC+ production cuts to make consumers 'become increasingly poorer', CEA says

Further OPEC+ production cuts to make consumers ‘become increasingly poorer’, CEA says

American consumers are set to be hurt and “become increasingly poorer” with the further production cuts announced by the Organization of the Petroleum Exporting Counties (OPEC+) that will lead to oil prices jumping by more than $4 a barrel, the Consumer Energy Alliance (CEA) announced.

Haitham Al Ghais, Secretary General of OPEC, Credits to OPEC

As a response to OPEC+ announcing further production cuts, the CEA issued a statement on 3 April claiming that America’s broken energy policies will hurt consumers and the U.S. economy.

“After seeing oil prices surging today after OPEC+ nations and their allies, including Russia, announce surprise production target cuts of about 1.16 million barrels per day (bpd) from May through the rest of the year, it feels like we are once again headed for $100 a barrel oil and high gas pump prices by the summer driving season,” said CEA President David Holt.

“The major difference from last year is now we don’t have the Strategic Petroleum Reserve to fall back on, since the Biden Administration drained it to its lowest level since the 1980s in an ineffectual attempt to lower prices before last year’s midterm elections. We have also missed a window to refill the SPR while prices were low, which is outright negligence against taxpayers.”

According to Holt, this is a dangerous point for the U.S., meanwhile, Americans are becoming increasingly poorer in the process.

This will hurt the people on fixed incomes and those at the poverty level the most, who do not have any options and are forced to make choices between milk, bread, heating or cooling their homes, and a gallon of gasoline, the CEA President notes.

“Instead of feckless energy decisions that will hurt Americans, the smart move is using our nation’s natural gas and oil as a tool of national, geopolitical and energy security – which means encouraging production, not killing it with activist-led bureaucracy.”

At a meeting held on 3 April, the Joint Ministerial Monitoring Committee (JMMC) reviewed the crude oil production data for January and February 2023 and noted the overall conformity for participating OPEC and non-OPEC countries of the Declaration of Cooperation (DoC).

The members reaffirmed their commitment to the DoC which extends to the end of 2023 as decided at the 33rd OPEC and non-OPEC Ministerial Meeting (ONOMM) on 5 October 2022 and urged the participating countries to achieve full conformity and adhere to the compensation mechanism.

The meeting noted voluntary production adjustment announced by Saudi Arabia (500 thousand b/d); Iraq (211 thousand b/d); UAE (144 thousand b/d); Kuwait (128 thousand b/d); Kazakhstan (78 thousand b/d); Algeria (48 thousand b/d); Oman (40 thousand b/d); and Gabon (8 thousand b/d) starting May until the end of 2023.

This will be in addition to the announced voluntary adjustment by the Russian Federation of 500 thousand barrels per day until the end of this year, which will be from the average production levels as assessed by the secondary sources for February.

Accordingly, this will bring the total additional voluntary production adjustments by the above-mentioned countries to 1.66 million b/d, OPEC said.

The meeting noted that this is a precautionary measure aimed at supporting the stability of the oil market. The next meeting of the JMMC is scheduled for 4 June.

The White House has issued its statement on the matter, claiming that it believes that OPEC+’s decision to cut production was an “unadvisable decision to make, given the instability in the market” and that it is focused on what the impact is to American consumers, first and foremost what are the prices for American consumers, not barrels per day. 

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To remind, at the end of 2022, the OPEC+ group of 23 oil-exporting countries, including Russia, opted to keep oil production unchanged due to the unpredictability of supply and demand.

During a short meeting, OPEC+ producers announced their intention to adhere to their policy to cut output by two million barrels per day (bpd), about two per cent of world demand, from November until the end of 2023.

The OPEC + members also underlined their “readiness to meet at any time and take immediate additional measures to address market developments and support the balance of the oil market and its stability if necessary.”