The flag of OPEC stands on a desk ahead of the 174th Organization Of Petroleum Exporting Countries (OPEC) meeting in Vienna in June 2018. Stefan Wermuth/Bloomberg via Getty Images
OPEC and its allied producers on Monday agreed to reduce oil production by 100,000 barrels per day amid concern regarding falling oil prices and lingering fears of a global recession.
Why it matters: The move reverses the group's decision last month to boost oil production for the month of September by 100,000 barrels per day.
- OPEC said in a press release Monday that, alongside its allies, it had agreed to "revert to the production level of August 2022...for the month of October."
The big picture: This is the group's first cut in oil production in more than a year and comes as crude oil prices have fallen 25% in the past three months, the Wall Street Journal reported.
- Saudi Arabia's energy minister warned last month that OPEC+ countries could cut oil production at any time, AP reported.
- Members of the group are concerned that a successful revival of the 2015 Iran deal could see an influx of Iranian oil hit the market, though tensions between the U.S. and Iran have spiked in recent days, with the U.S. conducting a military flyover of the Middle East over the weekend.
- Members are also concerned that a global recession, egged on by sky-high inflation, energy woes in Europe and economic slowdown in China spurred by the COVID-19 pandemic, could weaken oil demand, per the Journal.
What they're saying: "The President has been clear that energy supply should meet demand to support economic growth and lower prices for American consumers and consumers around the world," White House press secretary Karine Jean-Pierre said in a statement.
- "U.S. oil production is up by more than half a million barrels per day since the beginning of the year and is on track to be up by more than one million barrels per day by the end of the year, on the way to a new production record next year," Jean-Pierre added.
What's next: The group noted in the press release that it has plans to reconvene on Oct. 5, and could meet again in the meantime if necessary to "address market developments."