OPEC+ rebuked by U.S. after cutting output to keep prices high
BNN Bloomberg
OPEC+ agreed to make a large production cut to keep oil prices high, drawing an immediate rebuke from the U.S.
The move was defended by ministers from the producers group as necessary to protect the oil industry and their own economies from the risk of a global slowdown. The White House slammed the decision and indicated that it would respond to the supply reduction.
The Organization of Petroleum Exporting Countries and its allies agreed on Wednesday to reduce their collective output by 2 million barrels a day from November. The outdated production baselines used to measure the curbs means that actual oil supply will only fall by about half that amount, but it’s still the biggest cut since 2020 that risks adding another shock to the world’s economy.
Brent crude, the international benchmark, jumped as much as 2.4 per cent to a two-week high of US$93.96 a barrel.
Oil tankers are crossing the Strait of Hormuz and Iran’s actions to choke traffic through the shipping route have not hurt the U.S. economy, White House economic adviser Kevin Hassett told CNBC on Tuesday, reiterating the Trump administration’s position that the war should be over in weeks, not months.
Canada’s annual inflation rate slowed in February to 1.8 per cent, but many economists believe the new Statistics Canada data may be the dip before a spike driven by oil prices and the war in Iran.
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Canadian and U.S. stock markets gained ground on Wednesday as oil prices fell and tech stocks rose on both sides of the border.
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Daily oil exports from the Middle Eastern Gulf, home to top exporter Saudi Arabia and other major producers, have dropped by at least 60 per cent in the week to March 15 compared to February due to disruptions and output cuts amid the U.S.-Iran war, according to shipping data and Reuters calculations.
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Member countries of the International Energy Agency could release more oil into the market later “as and if needed” after they have already agreed the largest-ever reserve release, Executive Director Fatih Birol said on Monday.
Oil prices are down, and stocks are up Monday, though such moves have been quick to reverse since the war in Iran began.
Statistics Canada says the annual rate of inflation dipped below two per cent in February as the end of last year’s federal “tax holiday” helped take some steam out of the yearly price comparisons.
Middle Eastern sovereign wealth funds and state-backed companies are unlikely to scale back renewable energy investments in Africa despite disruptions from the Iran war, analysts say, given the strong long-term economic and strategic reasons driving such funding.
Crude oil stayed above US$100 a barrel on Monday and Gulf countries reported more attacks by Iran as the war entered its third week, while share prices were mixed.