The OPEC+ alliance led by Saudi Arabia and Russia is debating a fresh oil supply cut to the global economy as prices begin to slump. The group is set to discuss the proposal at the OPEC headquarters in Vienna, Austria on Sunday.
Saudi Arabia, a leader among the cartel’s members, has warned traders to avoid betting on lower oil prices. Russia, the leader of the non-member allies, has issued a contrasting statement that no reduction in output is expected.
OPEC+ previously cut output by 2 million barrels per day in October, thereby infuriating U.S. President Joe Biden as higher gasoline prices were caused. Another supply cut was imposed in April, this time a surprise cut of 1.16 million barrels per day.
After climbing as high as $87 per barrel, Brent crude has slumped to around $75 per barrel. U.S. crude has fallen below $70 per barrel during the same period.
James Swanston, Middle East and North Africa economist at Capital Economics has cautioned that the Saudi’s warning to traders does not necessarily signify an impending output cut. “Our expectation is that OPEC+ will stick with current output quotas,” Swanston commented. “There have been signs that the government may be readying to live with lower oil prices and running budget deficits.”