Oil, OPEC + slap in the US. Biden: myopic choice – Economy

Opec + slap to Joe Biden. The cartel of the major oil-producing countries decides to reduce production by two million barrels a day in an attempt to support crude oil prices, challenging the West struggling with expensive energy. The American reaction was immediate: the president spoke of an “unnecessary” reduction and, saying he was disappointed, criticized a “short-sighted” choice. The White House has tried to the end to pressure OPEC + not to make a cut that threatens to drive up energy and gasoline prices a month before the mid-term elections, thus complicating the efforts of the Democrats to maintain control of Congress. The pressing, however, was not successful. Saudi Arabia has in fact decided to side with Russia and push for a reduction in production, turning its back on American allies and reigniting violent criticism against the White House for Biden’s recent visit to Ryad. “It wasn’t a waste of time,” denied the accusations John Kirby, the spokesman for the National Security Council. OPEC + shows itself to be “aligned with Russia”, added White House spokeswoman Karine Jean-Pierre, speaking bluntly of an “error” on the part of the cartel. Criticizing the cut, Biden pledged to consult Congress immediately to assess the tools and powers needed to reduce OPEC + control over energy prices, and opened up for a new release of strategic oil reserves to calm prices. Europe is also looking with concern at the cut in production. According to analysts, the choice of OPEC + is “political and is a clear sign of discontent over the price cap because, regardless of its effectiveness, it is considered a dangerous precedent”. Having pushed for the reduction, Saudi Arabia “is on a collision course” with the United States and the West, showing itself to be allied with Russia and “exposing itself to non-negligible political consequences”. For Opec +, the decisive cut is the largest since 2020 but, in reality, it will result in a reduction that is half of that announced. In fact, many member states are producing less than their quotas and are therefore already in line with the new limits without having to resort to a cut in production. Equity markets are watching the cartel cut with concern fearing further geopolitical tensions. The European stock exchanges all closed in red, with Milan closing the session down by 1.52%. Wall Street is also heavy, where fears for OPEC + are added to those for good American economic data that extinguish hopes for a less hawkish Fed.