OPEC+ and Russian allies ‘historic’ cut

OPEC+ and Russian-led allies for the first time in 2 years are meeting in person to discuss a significant
oil production cut that not all participants are in favor of.
The 45^th Meeting of the Joint Ministerial Monitoring Committee (JMMC) and the 45^th OPEC and non-OPEC
The Ministerial Meeting will take place in person at the OPEC Secretariat in Vienna, Austria, on
Wednesday, 5 October 2022.
The OPEC Secretariat looks forward to welcoming all ministerial delegations again to Vienna.

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Not all are in favor

The reason

What if?

Not all are in favor

Not all are in favor of the OPEC+ and Russian allies ‘historic’ cut
Now not all members are on board with the proposed production cuts. Iran, for instance,
has been reluctant to reduce its output levels because it needs revenue to fund its economy.
OPEC+ meeting on Wednesday to discuss the proposed output cut. It is not yet clear if all members of
the Russian allies will agree to the cut. Russia, which is not a member of OPEC, has not yet said if it will
support the output cut. The coronavirus outbreak has already caused a sharp drop in demand for oil as
travel restrictions and other measures have been put in place to contain the virus. The International
Energy Agency has forecast that global oil demand will fall by 435,000 barrels per day in the first quarter
of 2020 because of the outbreak.

Additionally, some analysts believe that Saudi Arabia and other major producers may be overstating their
reserves to justify cuts. As such, it remains to be seen whether or not this meeting will result in an agreement
among all members, yet OPEC is expected to announce a production cut. This would be a historic move, as it
would be the first time in two years that OPEC has taken action to reduce output.

The reason

The reason is simple: global oil demand has been weak due to the pandemic and OPEC wants to prop up prices.
A production cut will do just that. Some argue that Saudi Arabia, the largest producer within OPEC, should shoulder
most of the burden when it comes to cuts. After all, they have been able to weather the storm better than most
thanks to their large reserves.
However, investors believe that all members should make a sacrifice for this deal to work. Otherwise, we could see
prices continue to decline and further harm producers who are already struggling.

What if?

If OPEC does agree on a production cut at this meeting, it could help alleviate some of the pressure on oil prices.
However, it is worth noting that such cuts would likely only be temporary fixes; without fundamental changes to global
demand and supply dynamics (such as increasing the use of renewable energy), oil prices are highly likely to continue
their downward trend over the long term.
In conclusion, it’s the first time in two years since 2020, the OPEC ministers are not heading to Austria and not taking any
action. Therefore, a historic cut will be made, and investors believe that an agreement will be reached at this week’s meeting
and that it will be good for both consumers and producers alike. All members must come together and make some sacrifices
so that we can get through these tough times together – stronger

OPEC+ and Russian allies ‘historic’ cut

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