Oil prices slid after reports that Saudi Arabia and other OPEC producers are discussing an increase in crude production!
The move could help heal a rift with the Biden administration and keep oil flowing when the harshest sanctions to date strike the Russian energy industry starting Dec. 5. Brent-crude futures fell more than 4.5% to about $83.40 a barrel, extending earlier losses.
Tweet on Oil prices production
Oil Prices Slide on Potential OPEC+ Output Increase!
— The_Journalbiz (@the_journalbiz) November 21, 2022
FactSet Chart on Brent crude production
An increase of up to 500,000 barrels a day is under discussion for the Dec. 4 meeting of OPEC and its allies, led by Russia. Collectively the group is known as OPEC+.
Any increase would mark a partial reversal of a decision last month to cut production by 2 million barrels a day, which inflamed tensions between Saudi Arabia and the U.S. It would come at an unusual time, after a recent decline in oil prices driven by traders’ concerns about the outlook for the world economy.
“Everybody’s been a bit wrongfooted,” said Doug King, chief executive of RCMA Capital, which trades commodity markets, of the OPEC talks. The cartel might be acting on the assumption that Russian oil exports fall after the sanctions take effect and moving to offset that loss, the hedge-fund manager added.
Russia is front-loading oil exports before the West and its Asia-Pacific allies restrict shipments next month, Mr. King said, adding that this has pressured prices. “They’ve just chucked every barrel out they possibly could before the sanctions kick in,” he said.