The Organization of Petroleum Exporting Countries (OPEC) and Russia announced yesterday that they would be cutting back daily oil production to the tune of about two million barrels per day to help shore up oil prices. I would be more concerned if OPEC wasn’t already struggling to meet its own quotas.
Chronic underinvestment and a host of technical and…other production issues have been causing significant production declines throughout OPEC member nations, particularly among African producers. Throughout much of 2022, that figure has hovered between 1 and 2 million barrels per day below OPEC production targets. Add in the rest of OPEC+ (the 13 OPEC member states and other significant oil exporters, like Russia) and that figure tips over 3 million. A reduction in target quotas might not have the long-term impact on oil prices they expect, though the market is historically notoriously speculative.
NB: at 1:57 I mention internal financing, but I should have said external. Margaritas…
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