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OPEC+ Shocks Markets with Surprise 1.16 Million BPD Production Cut

On April 2nd, Saudi Arabia and other OPEC+ oil producers announced a surprise cut in oil production by around 1.16 million barrels per day (Reuters, 2023). The announcement has significant implications for global oil prices and market stability.

Leading the cut, Saudi Arabia and Russia have decided to reduce their output by 500,000 barrels each, followed by Iraq, United Arab Emirates, and Kuwait (New York Times, 2023). The unexpected move by OPEC+ could potentially lift global oil prices by $10 per barrel, according to the head of investment firm Pickering Energy Partners (Reuters, 2023).

The decision to cut production has been a coordinated effort between OPEC and Russia, signaling that OPEC+ remains in control of global markets (Reuters, 2023). However, this move is contrary to previous assurances that OPEC+ would hold supply steady in order to maintain a stable market (Fortune, 2023).

It has been suggested that OPEC+ members may be responding to growing fears of a recession later this year, following the failure of several American and European banks as well as central bankers' continued efforts to stabilize the global economy (New York Times, 2023). The recent oil price fall to a 15-month low might have also contributed to the decision (Irish Times, 2023).

In October last year, OPEC+, which comprises the Organization of Petroleum Exporting Countries (OPEC) and allied producers led by Russia, agreed to output cuts of 2 million barrels per day from November until the end of the year (The Guardian, 2023, 2023). This decision had sparked tensions with Washington, as tighter supply can lead to increased oil prices (CTV News, 2023). The US has argued that higher oil prices harm the global economy and increase inflationary pressures (CTV News, 2023).

The additional 1.16 million barrels per day cut is aimed at supporting market stability and has been seen by some analysts as helping crude oil prices extend their rally from 15-month lows (US News, 2023). However, the US sees the OPEC output cuts as unadvisable (US News, 2023), raising concerns about the impact on the global economy.

The impact of the OPEC+ production cuts will depend on various factors, including the global economic outlook, the balance between supply and demand in the oil market, and the response of other oil producers to the cuts.

Given the potential for higher oil prices, energy-importing countries could face increased financial pressure due to rising energy costs, which could, in turn, contribute to inflationary pressures. Higher oil prices may also lead to higher transportation costs, affecting industries and consumers alike.

On the other hand, energy-exporting countries may benefit from the higher oil prices, as it will increase their revenue from oil sales. This could lead to increased investment in the energy sector and potentially support economic growth in these countries.

Non-OPEC oil producers may also react to the production cuts by increasing their own production to take advantage of higher prices. This could partially offset the impact of the OPEC+ cuts, depending on the scale and speed of the response.

In conclusion, the surprise decision by OPEC+ to cut oil production by 1.16 million barrels per day signals a significant shift in global oil markets. The move, led by Saudi Arabia and Russia, is expected to result in higher oil prices and could have a ripple effect on the global economy. While OPEC+ aims to maintain market stability, the implications of these cuts remain to be seen, as the global economy faces mounting challenges in the face of a potential recession and ongoing geopolitical tensions.


Reuters. (2023, April 2). Saudi Arabia, other OPEC+ producers announce voluntary oil output cuts. Retrieved from

New York Times. (2023, April 2). Saudi Arabia, Russia lead in making announced cuts. Retrieved from

Reuters. (2023, April 2). OPEC production cut could lift oil prices by $10 per barrel, analyst says. Retrieved from

Fortune. (2023, April 2). OPEC+ surprise oil production cut despite previous assurances. Retrieved from

Irish Times. (2023, April 2). OPEC+ makes surprise 1 million-barrel oil production cut. Retrieved from

The Guardian. (2023, April 2). OPEC+ announces surprise cuts in oil production of about 1.15 mbpd. Retrieved from

CTV News. (2023, April 2). OPEC+ alliance announces surprise cuts of around 1.16 million barrels per day from May to year-end. Retrieved from

US News. (2023, April 2). US sees OPEC output cuts as unadvisable. Retrieved from

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