OPEC+ cuts: the media’s verdict

Major stock markets in the Gulf rose in early trading on Thursday, joining the rise in oil prices following the announcement late on Wednesday October 5 that the oil alliance OPEC+ had agreed to cut production by about two million barrels per day, the largest reduction since 2020.

• OPEC+ agrees deep oil production cuts, Biden calls it shortsighted
• Behind the scenes at the controversial OPEC+ meeting
• Opec+ treads fine line between oil markets and geopolitics

While the news was welcomed by the regional stock markets and energy analysts, the world’s media focused on what this means for global geopolitics and a shift in power from Washington to Moscow.

AGBI looks at how the OPEC+ announcement was met by the media around the world.

Al-Arabiya, Saudi Arabia

Riyadh-based Al-Arabiya focused on how US President Joe Biden said he was “disappointed” by the news of the OPEC+ cuts and that his administration would look to reduce the organisation’s control over energy prices.

It said that US officials said the decision would negatively impact lower- and middle-income countries the most.

It also referenced Wednesday’s statement from the White House which said the US would continue pumping oil from the Strategic Petroleum Reserve (SPR) and that Biden has directed his energy secretary to look at ways to increase domestic production in the “immediate term”. The statement also said that Biden’s administration would open talks with Congress “on additional tools and authorities to reduce OPEC’s control over energy prices”. 

Al-Arabiya noted it is unclear what those measures could be.

Saudi Arabia rebuffed criticism that it was colluding with Russia to drive prices higher and said the West was often driven by “wealth arrogance” when criticising the group.

Arab News, Saudi Arabia

Arab News noted how the oil cuts come despite US pressure to pump more, and will curb supply in an already tight market.

It also highlighted how the move drew a swift rebuke from US President Joe Biden, quoting from a statement issued by national security adviser Jake Sullivan and top economic adviser Brian Deese, which said: “The president is disappointed by the short-sighted decision by OPEC+.” 

It noted how the statement also said that the supply cut will hit countries “already reeling” from high prices while “the global economy is dealing with the continued negative impact” of Russia’s attack on Ukraine.

It went on to observe how Saudi Arabia and other members of OPEC+ have previously said they seek to prevent volatility, rather than to target a particular oil price when considering production targets. 

The National, Abu Dhabi

The National led with the fact that oil prices climbed after the OPEC+ alliance agreed to reduce output by two million barrels per day.

It noted how the announcement marked the alliance’s biggest production cut since the start of the coronavirus pandemic in 2020, “as it vies to boost the energy market amid a global economic slowdown that is weighing on fuel demand”. 

The National cited a research note published by Emirates NBD which said how given that many producers within OPEC+ have been unable to meet their targets, the new cut output is higher than many members’ current production levels, with a two million bpd reduction expected to end up being closer to one million bpd in terms of actual cuts to output.

The paper said that Saudi Arabia and Russia will bear the brunt of the cuts, with their targets reduced by 526,000 bpd respectively, accounting for more than half the total cuts.

The Financial Times, UK

The Financial Times focused on how the White House has accused OPEC+ of aligning with Russia. It noted how Saudi Arabia had led the group in agreeing deep oil production cuts, which in turn has prompted a backlash from countries battling surging energy inflation triggered by Moscow’s invasion of Ukraine. 

It said the decision came despite extensive lobbying by the US government before the meeting and marked a significant breach with the Biden administration, which is seeking to drive down oil and petrol prices ahead of crucial mid-term elections in November and to starve Russia of energy revenues.

It cited analysts who said that Saudi Arabia’s move, which will damage western governments’ efforts to curb Russian oil income used to sustain its war in Ukraine, marked a significant moment in Riyadh’s 75-year energy alliance with the US.

The New York Times, US

The New York Times argued that the OPEC move shows the limits of Biden’s fist-bump diplomacy with the Saudis.

“OPEC’s decision to curb oil production was a signal that President Biden’s influence over his Gulf allies was far less than he had hoped,” the paper observed.

“In both optics and substance, the move by OPEC and its allied oil producers underscored the challenges the United States faces in managing its foreign and economic policy at a time when the global economy is at risk of recession, and energy politics has emerged as a key component of the conflict in Ukraine.”

The paper noted how the OPEC move sharply undercuts President Biden’s effort to avoid an increase in gas prices ahead of the mid-term elections, while setting back his push to constrain the oil revenue that Russia is using to pay for its war in Ukraine.

Bloomberg, US

Bloomberg focused on how the implication of the production cuts is clear: “in the increasingly hostile energy war between Russia and the West, Saudi Arabia is willing to help Vladimir Putin and snub Joe Biden.” 

It mentioned how US officials had spent the past few days in a frantic lobbying effort to persuade Riyadh and other members of the oil producers’ group to change course. It cited White House Press Secretary Karine Jean-Pierre, who told reporters: “It’s clear that OPEC+ is aligning with Russia with today’s announcement.” 

The newswire went on to observe how for Biden, the decision to cut production is a blow, saying that it is a personal rebuff to a president who had vowed during his election campaign to make Saudi Arabia a “pariah”, only to seek to patch up relations this year in the hope of securing higher oil supplies. 

It added that this also hinders Biden’s attempts to bring down prices and squeeze Russia’s revenues by lobbying for a price cap on Russian oil and releasing stocks from the US strategic petroleum reserve. 

Bloomberg noted how while the production cut will be smaller in reality than on paper, at around one million barrels a day, the decision’s political impact is likely to reach beyond its effect on the market.

It cited Saudi officials who said the OPEC+ decision underscores the kingdom’s evolving foreign partnerships, driven in part by perceived slights from Washington.

CNBC, US

CNBC cited a statement issued by the White House which noted how Biden had directed the Department of Energy to release another 10 million barrels from the Strategic Petroleum Reserve next month.

It also reported how the statement had said: “In light of today’s action, the Biden administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices.”

The Daily Mail, UK

The Daily Mail led on how the US has said that the Saudi-led OPEC+ decision to cut oil production by two million barrels a day shows it is aligning with Russia.

The tabloid said the decision represented a huge boost for Putin ahead of the European oil ban. 

“The move, which also shocked Europe, will bolster Kremlin finances and help Putin weather a looming European ban on oil imports, driving up fuel prices worldwide just as winter is looming,” the paper reported, before adding: 

“It will also further aggravate inflation which has reached decades-high levels in many countries and hurt European households already struggling with sky-high energy bills.”

The tabloid also highlighted how, besides a token trim in oil production last month, the major cut is an abrupt turnaround from months of restoring deep cuts made during the depths of the pandemic.