Fuel consumers in Ghana and other parts of the world are likely to pay more for fuel in the coming months after OPEC+ producers announced a surprise cut in production.
On Sunday, Saudi Arabia announced that it, along with other members or allies of the Organization of Petroleum Exporting Countries, would begin a “voluntary reduction” in crude oil production (OPEC).
The cuts will begin in May and last until the end of the year, according to a Saudi Ministry of Energy official quoted by the Saudi state-run news agency SPA.
According to SPA, the cuts are in addition to those announced by OPEC+ in October.
That month, oil producers had agreed to slash output by 2 million barrels a day, the largest cut since the start of the pandemic and equivalent to about 2% of global oil demand.
Saudi Arabia now says it will cut oil production by another half a million barrels a day.
Meanwhile, Iraq will slash production by 200,000 barrels per day, and the United Arab Emirates will decrease output by 144,000 barrels per day.
Kuwait, Algeria and Oman will also lower production by 128,000, 48,000 and 40,000 barrels per day, respectively.
- If Akufo-Addo refuses to sign the anti-LGBT bill, it will be politically suicide, says Sam George.
- NPA enhanced the fuel margins for UPPF and BOST.
Rising prices
In a Sunday note, Goldman Sachs analysts said the move was unexpected but “consistent with the new OPEC+ doctrine to act pre-emptively because they can without significant losses in market share.”
The collective output cut by the nine members of OPEC+ totals 1.66 million barrels per day, said the analysts, who hiked their price forecast for Brent this year to $95 per barrel.
Saudi Arabia’s energy ministry described its latest reduction as a precautionary measure aimed at supporting the stability of the oil markets, according to SPA.
The White House pushed back on that notion — as well as the latest cuts by OPEC+.
“We don’t think cuts are advisable at this moment given market uncertainty — and we’ve made that clear,” a spokesperson for the National Security Council said. “We’re focused on prices for American consumers, not barrels.”
In October, OPEC+’s decision to cut production had already rankled the White House.
US President Joe Biden pledged at the time that Saudi Arabia would suffer “consequences.” But so far, his administration appears to have backed off on its vows to punish the Middle East kingdom.
Russia, a member of OPEC+, also said Sunday that it would extend a voluntary reduction of 500,000 barrels per day until the end of 2023. The move was announced by Russian Deputy Prime Minister Alexander Novak, as cited by state-run news agency TASS.
That decision was less surprising. Goldman analysts said they had forecast the cut would last into the second half of the year.
Brent crude, the global benchmark, jumped 4.8% to $83.73 a barrel, while WTI, the US benchmark, rose 4.9% to $79.36. Rising oil prices could mean inflation remains higher for longer, adding pressure to a hot-button issue for consumers around the world.
