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9 Oct, 2022 09:30

US hits out at OPEC over ‘unwise’ decision

The move to cut oil output is “unhelpful” the head of the Treasury told the Financial Times
US hits out at OPEC over ‘unwise’ decision

The head of the US Treasury Department has criticized this week’s decision by the Organization of the Petroleum Exporting Countries and allies (OPEC+) to lower oil production, in a phone interview with the Financial Times.

OPEC’s decision is unhelpful and unwise – it’s uncertain what impact it will end up having, but certainly, it’s something that, to me, did not seem appropriate, under the circumstances we face,” Treasury Secretary Janet Yellen was cited as saying.

Washington is “very worried about developing countries and the problems they face,” including the rise in fuel prices, Yellen said. The US and the Group of Seven (G7) countries are still debating a plan to set a price cap on Russian oil exports, which is being pitched as a way to stabilize global fuel prices and deprive Moscow of revenue to finance the military operation in Ukraine. She confirmed that Washington has high hopes for the measure, but did not disclose any new decisions regarding it.

Holding down prices is something that’s particularly helpful to developing countries that are suffering from high energy prices… The president has been focused for a lot of time on exploring all available options to try to bring [oil prices] down,” she stated.

OPEC+ announced its decision to cut oil production by 2 million barrels per day starting in November earlier this week. It will be the largest reduction in the group’s output since 2020. The group sees the move as a way to balance the market before the seasonal decline in demand, according to Russian Deputy Prime Minister Aleksandr Novak, who attended the OPEC+ meeting.

Analysts interviewed by Bloomberg warn that the output cut may lead to a jump in oil prices above $100 a barrel and force the US to tap its strategic reserves.

According to Bloomberg, Russia may introduce even larger output cuts than those announced by OPEC+ in response to the introduction of an oil price cap by the EU earlier this week. However, many analysts say that, given the rise in oil prices, Russia’s oil export profits are unlikely to suffer even with production cuts.

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