Crude oil rates are likely to reach $110 per barrel after OPEC Plus decides

Vienna/Washington: OPEC Plus, a group which includes the world’s leading fuel-producing countries, has decided to decrease crude oil production by two million barrels per day. This decision is considered to be a significant diplomatic victory for Russia. The United States has strongly reacted to this, and the Biden administration has criticised the announcement as protecting Russia’s interests and being short-sighted. Saudi Arabia has rejected the US criticism and said that the accusations against OPEC are incorrect. Goldman Sachs warned that the decision of OPEC Plus has started to increase the rate of crude oil, and by the end of the year, these prices will reach 110 dollars per barrel.

Crude oil rates sharply bounced after Russia launched a campaign in Ukraine in February. Crude oil rates had reached $130 per barrel in March. Analysts had warned that these prices could go up to 150 to 200 dollars if Western countries, including the United States, impose strict restrictions on Russian fuel. The fuel-producing countries also warned that if Russia stops the production and export of crude oil, other countries will not be able to replace it. Therefore, the European countries decided not to stop importing Russian fuel altogether. However, at the same time, the US, Europe, and allied nations had begun activities to control Russian fuel prices.

Against this background, the decision taken by the leading organisation of fuel-producing countries, OPEC and the OPEC Plus, which includes other oil-producing countries, leads to attention. It was decided in a meeting held on Wednesday to cut crude oil production by 20 million barrels per day from the OPEC Plus group of countries from November. This amounts to as much as two percent of the daily global output. The decision of OPEC Plus was not political but technical, informed UAE. Besides, the Secretary General of OPEC justified the decision by stating that it was to provide security and stability to the oil market.

There was a strong reaction from the US to the decision of OPEC Plus. President Joe Biden has been upset about the decision of OPEC Plus. The decision of the fuel-producing countries is short-sighted, and they have adopted the role of protecting Russia’s interests. President Biden will consult with the US Congress on this issue. National Security Adviser Jake Sullivan warned in a statement that steps would be taken to loosen OPEC’s control over fuel prices. Members of Parliament from the ruling Democrat Party have taken an aggressive stance, demanding the US pull back its defence deployment in the Gulf. There are also indications that proposals in this regard will be tabled in US congress soon.

Meanwhile, crude oil prices again went back to $90 on Thursday following the OPEC Plus decision. It was recorded at $93 per barrel in Thursday’s transactions. Leading financial institutions have predicted that rates will continue to rise in the next few weeks. Goldman Sachs forecasts crude oil prices to reach $110 a barrel by the end of the year and $115 by the first quarter of 2023.