The powerful group of nations that effectively control the oil markets announced on Wednesday steep cuts to oil production, threatening to push gas prices higher as the world teeters on the edge of a global recession and Democrats stare down midterm elections.
At its first in-person meeting in Vienna, Austria, since the onset of the COVID-19 pandemic,
the group of 24 countries in the Organization of Petroleum Exporting Countries (OPEC) and allies, a group called OPEC+, announced that they would cut production by two million barrels per day, starting in November. The cut represents an about face after months of restoring the cuts made during the pandemic and potentially could help ally member Russia weather oil bans in Europe over its invasion of Ukraine.
“We are here to stay as a moderating force, to bring about stability,” said Saudi Energy Minister Abdulaziz bin Salman of the decision.
But the Biden administration had another take. White House Press Secretary Karine Jean-Pierre called the decision “shortsighted” as the world continues to reel from inflation and Russia’s war in Ukraine.
“Today's announcement is a reminder of why it is so critical that the United States reduce its reliance on foreign sources of fossil fuels,” she said.
President Joe Biden has been calling for the member nations to ramp up production amid the faltering economy. In the aftermath of OPEC’s decision, he ordered the release of an additional 10 million barrels from the Strategic Petroleum Reserve (SPR) starting next month to combat rising gas prices. Biden will “continue to direct SPR as necessary,” Jean-Pierre said. In March, Biden authorized the Department of Energy to release up to 180 million barrels to serve as wartime supply until production ramps back up in the U.S.
The average price of regular unleaded gasoline nationwide hit $5.016 in mid-June, the highest recorded average price, not adjusted for inflation, according to AAA. Since then, prices have fallen 23.6 percent to $3.831 as of Wednesday.
But experts warn the OPEC+ cuts will push prices back up. GasBuddy analyst Patrick De Haan told Politico the decision could drive up U.S. gas prices by 15 to 30 cents per gallon, which could prove damaging for Democrats heading into midterm elections. Surging inflation had already dragged Biden’s approval ratings and could hurt his party already facing a tough contest that could cost them control of Congress.