OPEC+ has agreed to cut production starting in November in response to interest rate increases. The group, which includes Saudi Arabia and Russia, has stated that action needs to be taken to protect their interests. They have agreed to cut production by 2 million barrels per day.
Saudi Arabia has been forced to deny it is colluding with Russia in an attempt to drive prices higher. The country is an ally of the United States, but Joe Biden has called the decisions to cut production at a time when demand is so high ‘short-sighted’.
There has been some degree of tension between the US and Saudi Arabia since the beginning of the year. President Biden visited Riyadh in order to try and secure a commitment between the two countries to cooperate on energy, but no firm agreement could be reached. Saudi Arabia has also refused to condemn Russia’s invasion of Ukraine, while the US has done so vocally.
The conflict in Ukraine has led to a shortage of gas available in Europe which has led to rising prices. There is also concern that these shortages could also lead to rationing of both gas and electricity on the continent over the winter months. European countries have been forced to look for alternatives to gas in order to decrease their reliance on Russian supplies.
