In view of the recession and above all because of the recent drop in prices, the major oil producers want to get less oil out of the ground. That could call the US into action. For one thing, Washington wants to limit Russia's revenues. On the other hand, the move would fuel inflation.
Despite concerns about a global recession triggered by high energy prices, the OPEC oil cartel has agreed to cut production. The cuts are said to be two million barrels a day. The extended cartel, which also includes Russia, is reacting to the drop in oil prices with this measure. Due to fears of a global recession, the strong dollar and rising interest rates, these had recently fallen to around $90 a barrel after three months ago they were still around $120. A barrel is 159 liters.
According to insiders, the US administration of President Joe Biden put pressure on OPEC to refrain from throttling. "Higher oil prices, if driven by sizeable production cuts, would likely anger the Biden administration ahead of the U.S. midterm election," Citi analysts wrote. "There could be further policy responses from the US, including additional releases of strategic stockpiles." Even the experts from JP Morgan do not rule out that Washington will take countermeasures by releasing further oil reserves.
According to the Citi analysts, the "No Oil Producing and Exporting Cartels Act", or Nopec for short, could also be launched. This law would pave the way for antitrust lawsuits aimed at protecting consumers and businesses in the US from artificially induced increases in the price of gasoline and heating oil. The accusation is that the producing countries, which are members of the OPEC oil cartel, intentionally drove up prices by cutting supplies.
The US wants to lower oil prices, among other things, to deprive Russia of oil revenues because of the war against Ukraine. Saudi Arabia has not yet condemned Moscow's actions. Relations between the Kingdom and the US Biden government are said to be strained. Among others, OPEC includes Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, the Republic of the Congo, Kuwait, Libya, Nigeria, Saudi Arabia, the Emirates, Venezuela, as well as Russia, Kazakhstan, Mexico and Oman.