FX.co ★ OPEC+ agrees to dramatically cut oil production

The OPEC+ alliance announced it would cut oil production by 2 million barrels per day. Bloomberg was the first to report on the prospect of a significant reduction in crude output. However, it informed that the cartel considered oil cuts between 1 million barrels and 1.5 million barrels daily.

Nevertheless, the OPEC+ group decided otherwise. It agreed on oil production cuts of 2 million barrels per day, the most large-scale one since the outbreak of the coronavirus pandemic.

When the news about a possible reduction in production broke in early October, it triggered oil shortage concerns in the market. On October 4th, the Brent benchmark hit $90 per barrel for the first time since September 23rd. The following day, the price peaked at $92.9 per barrel, according to the ICE exchange.

Ahead of the OPEC+ meeting, the Biden administration attempted to dissuade oil producers in the alliance from dramatically cutting outputs, seeing it as an unnecessary measure in the current economic situation. The White House framed the reduction in oil production by the OPEC+ countries as a "total disaster" and "a hostile act."