The OPEC (Organisation of the Petroleum Exporting Countries) and its allies have decided to cut down on oil production in a bid to boost the prices. The low prices sparked fears of a possible economic slowdown among a number of countries and this decision was taken as a precautionary measure.
According to the statement released by OPEC, the oil producers will decrease their output by 100,000 barrels per day for October – which is around 0.1 per cent of the global demand. However, they also said that they are ready to meet at any point to adjust the production depending on the situation.
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“OPEC+ is wary of protracted price volatility generated by weak macro sentiment, thin liquidity and renewed China lockdowns, as well as uncertainty over a potential U.S.–Iran deal and efforts to create a Russian oil price cap,” Matthew Holland at Energy Aspects to Reuters after the announcement.
In the last few months, the fuel prices have been extremely unstable and this is a move that can steady the situation, according to the OPEC nations. Saudi Arabia hinted at a possible measure last month but the official statement shows that all the OPEC countries are in agreement in regards to this move.
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The other factor driving the prices of fuel in the market is the return of Iran as a proper supplier after quite some time. The revival of the nuclear deal has allowed Iran to join the global suppliers list once again and this will mean an addition of nearly 1 million barrels per day if the sanctions are removed.
(With inputs from agencies)
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