Energy ministers of the Organization of the Petroleum Exporting Countries (Opec) and allies have announced their countries will cut the amount of oil they produce by two million barrels per day – the equivalent of 2 per cent of global supply – in a decision expected to rise petrol prices all around the world.
The group said the cuts, which will come into place in November, were based on the "uncertainty that surrounds the global economic and oil market outlooks".
The announcement marks the biggest reduction by the group since the height of the pandemic in 2020. Since then, Opec nations have been gradually unwound those record cuts. However, they have now taken the opposite approach, as to address the recent fall in oil prices, caused by the slowing down of the global economy.
"We are here to stay as a moderating force, to bring about stability," said Saudi energy minister Abdulaziz bin Salman.
"We are going through a period of diverse uncertainties, which could come our way, it's a brewing cloud," he stressed, adding that Opec+ sought to remain "ahead of the curve".
The rise in petrol prices can already be seen, with the cost of a barrel of Brent crude jumping almost 2 per cent to more than $93 (£82) a barrel on Wednesday.
A spokesman for the RAC motoring group said the reduction announced on Wednesday would "inevitably" lead to higher oil prices, forcing up the wholesale cost of fuel.
"The question is when, and to what extent, retailers choose to pass these increased costs on at their forecourts," spokesperson Simon Williams said.
The US White House has positioned itself in opposition to the decision, with President Joe Biden calling it a "shortsighted decision" at a time when "maintaining a global supply of energy is of paramount importance". White House spokesperson Karine Jean-Pierre told reporters on Air Force One it was "clear" Opec+ was "aligning with Russia".
In response to the Opec+ production cuts, the US said it would continue to release oil from its strategic stockpiles "as appropriate" and that it was exploring "additional responsible actions" to lift domestic oil supply.
However, Opec members defended their decision as a way of stabilising oil prices.
"The decision is technical, not political," United Arab Emirates energy minister Suhail al-Mazroui told reporters as Opec+ members gathered in Vienna to discuss the plans.
Despite the targets, experts predict that the actual cut in output is likely to be closer to one million barrels per day as many weaker members have struggled to hit production targets in recent months.
At its last meeting in September, Opec+ reduced the amount of oil it produces by 100,000 barrels a day in October. That token cut did not do much to boost lower oil prices, but it put markets on notice that the group was willing to act if prices kept falling.
The cartel's decision came hours after EU countries agreed to a US plan to impose a price cap on Russian oil exports, an effort by Western countries to drive down energy prices.
In June 2022, figures from the Office for National Statistics show that the UK had already achieved its goal of phasing out Russian oil and natural gas imports.
