OPEC+ just made the Fed’s job more complicated. Here’s what it did

Several OPEC+ members on Sunday announced intentions to voluntarily cut a further combined 1.16 million barrels per day of production, in a move independent from the broader bloc’s output strategy.

Several OPEC+ members on Sunday announced intentions to voluntarily cut a further combined 1.16 million barrels per day of production, in a move independent from the broader bloc’s output strategy.
Several OPEC+ members on Sunday announced intentions to voluntarily cut a further combined 1.16 million barrels per day of production, in a move independent from the broader bloc’s output strategy.

Several OPEC+ members are set to tighten global production by an additional 1.16 million barrels per day until the end of the year, further burdening central bank efforts to curtail global inflation — but critically protecting the alliance’s broader output strategy from political pressures.

Washington has stepped in to criticize Sunday’s announcement where eight OPEC+ producers — including group leader Saudi Arabia and key allies Kuwait and the UAE — said they would remove more than a combined 1 million barrels per day from global oil markets, as part of an independent initiative unlinked to the broader OPEC+ policy.

This adds to Russia’s existing intentions to trim 500,000 barrels per day of its own production from February output levels, now until the end of the year — bringing the combined voluntary cuts of OPEC+ members in excess of 1.6 million barrels per day.

“We don’t think cuts are advisable at this moment, given market uncertainty — and we’ve made that clear,” a spokesperson for the U.S. National Security Council said, according to Reuters.

U.S. President Joe Biden’s administration has repeatedly lambasted the OPEC+ group for its production cuts, citing the inflationary toll on households and flinging accusations of camaraderie with sanctions-struck Russia. Curbs in production lead to smaller supply, causing higher prices at the pump in importing countries which then provides a boost for headline inflation figures.

Relations devolved into a war of words with OPEC+ chair Saudi Arabia at the end of last year, when the oil group agreed a 2 million barrel per day cut until the end of 2023 — a decision upheld at ministerial and technical committees since.