With OPEC+ nations looking to keep prices inflated, Saudi Arabia is joining them in cutting oil production. Done as a last-ditch effort to keep prices up, the efforts of other nations were not enough. The current situation has American drivers happy as gas prices plunge, but many cannot help but wonder how low they could be if we still had Trump-era levels of production.
Announced on the Saudi Energy Ministry website, the cut will be for 1 million barrels per day through the first three months of 2024. Previously this cut would be ending in December 2023. A laundry list of other OPEC+ and other country cuts to oil production and refinement have failed to stabilize higher pricing. With many concerned that the world will soon face an oversupply with a weak economy, they worry prices could destabilize easily.
Posted on November 29th, the announcement followed an online OPEC+ meeting with countries like Russia also taking part as they debated global oil production. It was also done the same day the United Nations climate conference kicked off in the United Arab Emirates, a nation that is also a member of OPEC+.
This meeting also granted OPEC+ member status to Brazil as of January. The country has been producing oil at breakneck speeds and advancing its technical abilities enough to become a significant force in the global oil market. Additionally, Angola, Congo, and Nigeria all had new output volumes set for them. Reaching this decision after the trio pushed a meeting set for November 26th to the 30th, the specifics of their change were not announced.
No other countries are facing a reduction currently, with Russia’s voluntary cut of 300,000 barrels per day remaining in effect through the end of 2023. However, they are also bargaining for more oil revenue to combat the Western sanctions they are facing for their continued war in Ukraine. As it is the king of OPEC+ Saudi Arabia is already needing to make $86 per barrel to break even with their planned spending goals.
This high valuation is due to Saudi’s goal to not only wean its economy off oil money but to also transition its revenue streams to support the goals of youngsters in the Kingdom. With crude currently remaining in the low to mid $80 per barrel price, it has become increasingly difficult for them to make ends meet for their future planning.
Pricing like this has kept gas prices significantly lower than the economy would expect them to be. Currently sitting at $3.25 per gallon for regular unleaded in the US, this same gallon was only $2.40 when President Biden took office in January 2021. Many economists and strategists have called for Biden to make major policy changes to help drive the price lower if he wants any chance of winning the 2024 elections.
Currently, the US is paying the price for Biden running the liberal playbook as it’s written and trying to force the nation to go green. Truth be told, oil producers are trying to force Biden’s hand. Producing a million barrels per day more in August 2023 than they did in 2022, these companies are trying to take advantage of a solid market for American crude, and Biden’s policies are keeping it advantageous for them to do so. This money ends up coming at the final stop- the consumer.
As the Saudis and other members of OPEC+ worry about making a good profit, Biden could destabilize it all and bring the Americans the relief we need from his policies and topple their economies. Going green simply isn’t the American way. We are a group of big, hairy, dirty, winners. Truthfully, we like lots of horsepower, loud exhaust pipes, and hot apple pie. A quiet electric car with 200 miles of range and a soy crisp just doesn’t do it for us. Give us the gas guzzlers and cheap gas back. We liked it better that way.
