Oil Spikes After OPEC+ Hints At 2 Million B/D Production Cut

Oil prices are extending their recent gains following headlines from Vienna that OPEC+ is considering a reduction in its production limit of as much as 2 million barrels a day.

However, the impact on actual production could be smaller since several members are already pumping far below their officials quotas, meaning they could automatically be in compliance with their new limit without having to curb production.

Nevertheless, it could still result in the cartel’s largest reduction since the deep cuts agreed at the outset of the Covid-19 pandemic in 2020 and WTI surged up to $87 on the news…

Notably, Saudi Aramco CEO Amin Nasser told the Energy Intelligence Forum in London this morning that the world is misinterpreting the oil market by worrying too much about a potential recession in the near future.

Current oil prices indicate a focus on “short-term economics rather than supply fundamentals.”

“If China opens up, [the] economy starts improving or the aviation industry starts asking for more jet fuel, you will erode this spare capacity,” he said.

“And when you erode that spare capacity the world should be worried. There will be no space for any hiccup — any interruption, any unforeseen events anywhere around the world.”

The timing could not be more interesting as it comes just weeks after Biden begged the Saudis to hike production and just weeks before the Midterms… with gas prices at the pump beginning to rise again (to record highs in California)…

Finally, Biden’s political emptying of the SPR has left it with a record low of just 22 days supply…

Source: Bloomberg

Let’s hope we don’t have a real emergency – other than collapsing poll numbers we mean of course…

And given the resurgence in crude and wholesale gasoline prices, regular pump prices are set to soar again…

By the way, whatever happened to that Ridiculous Buyers’ Cartel idea?