The Organization of the Petroleum Exporting Countries (OPEC) and its allies meet this week and will reportedly consider a production cut of over one million barrels per day to address what it considers a weak market. That would mark the biggest move by the oil cartel since the onset of the COVID-19 pandemic.
Oil prices have fallen about 23% in the last quarter, with Brent crude falling to $87.96 per barrel last week and light sweet crude at $82.87 per barrel. This has been the swiftest decline since 2020 as the slowing global economy has weighed on prices.
The U.S. has called for OPEC to pump more oil to bring down gas prices, but the cartel has been accelerating production cuts over the summer.
Other options being considered could include a smaller reduction of 500,000 barrels per day, or as much as 1.5 million barrels per day. Russia, which has been impacted by Western energy sanctions, is reportedly pushing for a cut of more than 1 million barrels.
The cartel will meet in person on Wednesday in Vienna. This will be the first in-person meeting of OPEC delegates since the emergence of the COVID-19 pandemic in 2020.
"What a difference six months make, considering that OPEC and OPEC+ were considering production increases in the spring following Russia's invasion of Ukraine. With crude oil prices now down 40% from their highs and fears of a global recession looming, the cartel is now considering production cuts to boost prices. The SPDR S&P Oil & Gas and Exploration ETF (XOP) has fallen 12% in the past month," said Caleb Silver, Investopedia's editor-in-chief.