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The Jerusalem Post

US concerned about Saudi Arabia, OPEC oil production cuts

 
Saudi Arabian oil (illustrative)  (photo credit: INGIMAGE)
Saudi Arabian oil (illustrative)
(photo credit: INGIMAGE)

Saudi Arabia and the OPEC announced they would cut their oil production in order to raise prices.

Saudi Arabia together with other members of OPEC, the umbrella organization for oil-exporting countries, announced cuts to the supply of oil, which is expected to hurt the US, among other countries.

The reason for the cuts is the desire to raise oil prices amid fears of a drop in demand.

As part of the step that was declared after an official OPEC meeting, the output will be cut by a total of 1.16 million barrels per day. The drop in production is expected to begin next month and will continue until the end of the year.

US unhappy about production cuts

This isn't the first time Saudi Arabia cut the production of barrels per day, after it announced a drop to two million barrels per day last November. The US condemned this step at the time.

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John Kirby, US National Security Council speaker, addressed the Saudi decision in a press conference, admitting that the decision to cut production had surprised the Americans. 

  The OPEC logo pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria, September 28, 2016.  (credit: RAMZI BOUDINA/REUTERS)
The OPEC logo pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria, September 28, 2016. (credit: RAMZI BOUDINA/REUTERS)

Even so, Kirby stressed that the US was informed about the move ahead of time.

In addition to Saudi Arabia, production was cut by Iraq, the UAE, Kuwait, Oman, Algeria and Russia, which in the past has reacted with production cuts to the imposition of price ceilings on its oil exports.

For the OPEC organization, this is a necessary step in order to stabilize the oil market, after last month the price per barrel fell to around 70 dollars, the lowest it has been in 15 months.

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