Oil target cuts free up capacity in case of crises, OPEC head says

Business

Oil output target cuts agreed by OPEC+ producers will leave them more supply to tap in the event of any crises, OPEC Secretary General Haitham al-Ghais told Al Arabiya TV on Friday.

OPEC+, which includes the 13 members of OPEC and 10 allies led by Russia, agreed on Wednesday to lower their output target by 2 million barrels per day.

OPEC’s de facto leader Saudi Arabia said the move was necessary to respond to rising interest rates in the West and a weaker global economy.

The decision was criticised by the United States where the White House said it was a sign the group was aligning itself with Russia.

U.S. President Joe Biden also faces mid-term elections next month in which high energy prices are a hot topic.

“This was not a decision from one country against another, and I want to be clear in saying this, and it’s not a decision from two or three countries against a group of other countries,” said Ghais.

“There are strong indicators that there is a high possibility that recession will happen, we decided in this meeting to be pre-emptive.”

Western nations worry higher energy prices will hurt the fragile global economy and hinder efforts to deprive Moscow of oil revenue following its invasion of Ukraine.

European Union sanctions on Russian crude and oil products are also set to take effect, in December and February, respectively.

Asked about the sanctions and a European Union proposal to cap the price of Russian oil, OPEC’s Ghais said he could not comment.

“The truth is, the shape of these proposed sanctions is not quite clear, and how they will be implemented is also unclear, so we cannot comment.”

Ghais also said OPEC+ does not target prices: “We are not targeting a price, we are targeting a balance in supply and demand.”