Dec 1, 2023 - Economy

Oil prices dip despite OPEC+ production cut

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

OPEC+, led by Saudi Arabia and Russia, announced new cuts to oil production Thursday, as the cartel seeks to prop up falling prices.

Driving the news: The 13-nation Organization of the Petroleum Exporting Countries and its ally Russia agreed to cut an additional million barrels a day of oil production.

Yes, but: The oil market shrugged off the effort to strengthen prices — oil benchmarks in the U.S. and worldwide fell.

  • "The cuts are short-term, for now, and only valid for the first quarter of 2024. Second, and most importantly, the group failed to agree to a strategy unanimously and had to rely on voluntary unilateral cuts instead," wrote analysts with research firm Rystad Energy.

💭 Thought bubble: Both Saudi Arabia and Russia — especially after it started its war against Ukraine — have become increasingly reliant on China as the key buyer for their petroleum exports.

The bottom line: OPEC+'s focus on China — arguably the weakest of the world's major economies — may be limiting its ability to influence global oil prices.

Go deeper