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OPEC+ defended its controversial oil-production cuts, saying they were justified by the growing risk of a global recession.
The cartel agreed on Oct. 5 to reduce its collective crude-output target by two million barrels, sparking condemnation from consumers including the U.S., which accused it of aiding Russia’s war in Ukraine. But the decision was motivated purely by supply and demand, and the drop in prices since the meeting shows it was the right one, said United Arab Emirates Oil Minister Suhail Al Mazrouei.
Oil ministers from Congo and Equatorial Guinea reiterated this defense, while OPEC’s top official said the group had little choice but to take preemptive action.
The oil market faces “very real potential for a global recession, which some may say has already started,” OPEC Secretary-General Haitham Al-Ghais said at African Energy Week in Cape Town on Tuesday. “There was a consensus among the ministers regarding the need to act now and prevent a crisis later on.”
The agreement to curb production between the Organization of Petroleum Exporting Countries and its allies triggered a war of words between the U.S. and Saudi Arabia, the group’s de-facto leader. The White House accused the kingdom of coercing other countries into the supply cuts and taking Russia’s side in its brutal war in Ukraine. The International Energy Agency said the cartel’s decision could tip the world into recession.
In the weeks since the meeting, Saudi Arabia and many other OPEC+ members have repeatedly said the motivation for the cuts was purely economic.
“It was a technical decision, it had nothing to do with politics,” Equatorial Guinea Oil Minister Gabriel Obiang Lima said at the conference in Cape Town on Tuesday. “OPEC’s purpose is only to stabilize the market,” said his counterpart from the Republic of Congo, Bruno Itoua.
Oil prices initially rallied after the OPEC+ agreement, which will only actually remove about one million barrels a day from the market because several members are already well below their production targets. Since then, prices have dropped as the weakness of the global economy has come increasingly into focus.
Brent crude, the international benchmark, dropped below US$90 a barrel on Tuesday, close to its level the day before the meeting. This fact shows the decision to cut was economically justified, UAE Energy Minister Mazrouei told reporters in Abu Dhabi.
“The proof it was right is that we saw a decrease in prices,” he said.
