By Naveen Athrappully
Contributing Writer
Nations in the OPEC+ group have agreed to continue keeping daily oil output lower by nearly 4 million barrels a day in a bid to “support the stability and balance of the oil markets.”
The decision by the international consortium could resist any downward pressure on prices through the election season.
OPEC+ nations Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman met on Sunday and decided to continue the oil output cuts announced last year.
This includes a daily reduction of 1.65 million barrels announced in April 2023, which will now be extended until the end of December 2025. The 2.2 million barrels per day of production cuts announced in November 2023 were originally scheduled to end in September 2024.
However, these cuts will now be “gradually phased out” on a monthly basis by September 2025. This reduction may be paused or reversed based on market conditions.
The meeting of the OPEC+ nations was aimed at reinforcing efforts to “support the stability and balance of the oil markets.” Since April 2023, Brent crude oil has traded in a range of $70 to $100 per barrel. It was trading around $80 per barrel as of Monday. Oil prices have declined since hitting $90 in early April.
Commenting on the OPEC decision, oil expert Tom Kloza predicted on X a “modest rise” in crude prices in the third quarter of the year. In the final quarter, consumers should expect “lots of downward pressure.”
Tapping Strategic Oil Reserves
The Biden administration has announced plans to reduce gasoline prices. Last month, the government said it would release one million barrels of gasoline from its reserve to cut down pump prices ahead of the busy summer season.
Retailers and terminals were scheduled to receive 42 million gallons of gasoline by Monday. America’s emergency stockpiles have now dipped below 370 billion barrels.
Energy Secretary Jennifer Granholm said the Biden administration is “laser-focused on lowering prices at the pump for American families.” The White House is “ensuring sufficient supply flows to the tri-state and northeast at a time hardworking Americans need it the most.”
On May 29, Sen. John Barrasso, R-Wyoming, and Rep. Cathy McMorris Rodgers, R-Washington, sent a letter to Granholm criticizing the Biden administration’s decision to “further drain the Strategic Petroleum Reserve.”
The SPR is a “strategic asset” that is supposed to be used during national emergencies like wars and natural disasters. The reserve has reached its “lowest level since 1983” under President Joe Biden and the continued depletion of SPR is “troubling,” their letter stated.
They accused the administration of abusing the SPR for “political purposes” to bring down high inflation triggered by the government’s “radical rush to ‘green’ energy policies.”
When the Democrat came to office, the SPR had 638 million barrels, which has now been reduced to 367 million barrels, a 42% decline, the lawmakers said. The Republicans urged Granholm to “ensure that the SPR is not abused for political purposes in this election year.”
Meanwhile, Democrat senators sent a letter to Attorney General Merrick Garland asking the Department of Justice to investigate alleged price fixing in the oil industry.
During a probe by the Federal Trade Commission into ExxonMobil’s $60 billion proposed acquisition of Pioneer Natural Resources, the agency uncovered price-fixing evidence against former Pioneer CEO Scott Sheffield, the May 30 letter said.
Sheffield is alleged to have colluded with OPEC to “reduce output of oil and gas, which would result in Americans paying higher prices at the pump, to inflate profits for his company.”
These reports are “alarming” and provide credence to theories that “corporate avarice is keeping prices artificially high.”
This is also a national security threat as it could lead to the enrichment of America’s rivals like Iran and Russia, the lawmakers said.
They asked the DOJ to hold accountable any person in the oil industry involved in price fixing.
“Corporate malfeasance must be confronted, or it will proliferate. These alleged offenses do not simply enrich corporations; hardworking Americans end up paying the price through higher costs for gas, fuel, and related consumer products.”
