OPEC+ agrees deep cuts to oil production, Joe Biden calls 'shortsighted'

OPEC+ agreed on its deepest cuts to oil production since the 2020 COVID pandemic at a Vienna meeting on Wednesday, curbing supply in an already tight market despite pressure from the United States and others to pump more.

The cut could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising US interest rates and a stronger dollar.

The United States had pushed OPEC not to proceed with the cuts, arguing that fundamentals don't support them, a source familiar with the matter said.

Sources said it remained unclear if cuts could include additional voluntary reductions by members such as Saudi Arabia, or if they could include existing under-production by the group. OPEC+ fell about 3.6 million barrels per day short of its output target in August.

The White House said President Joe Biden would continue to assess whether to release further strategic oil stocks to lower prices.

"The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine," the White House said.

Biden faces low approval ratings ahead of mid-term elections due to soaring inflation and has called on Saudi Arabia, a long-term US ally, to help lower prices.

US officials have said part of the reason Washington wants lower oil prices is to deprive Moscow of oil revenue. Biden travelled to Riyadh this year but failed to secure any firm cooperation commitments on energy. Relations have been further strained as Saudi Arabia has not condemned Moscow's actions in Ukraine.

"Higher oil prices, if driven by sizeable production cuts, would likely irritate the Biden Administration ahead of US mid-term elections," Citi analysts said in a note.

"There could be further political reactions from the US, including additional releases of strategic stocks, along with some wildcards including further fostering of a NOPEC bill," Citi said, referring to a US antitrust bill against OPEC.

JPMorgan also said it expected Washington to put in place countermeasures by releasing more oil stocks.

Saudi Arabia and other members of OPEC+ - which groups the Organization of the Petroleum Exporting Countries and other producers including Russia - have said they seek to prevent volatility rather than to target a particular oil price.

Benchmark Brent crude rose towards $93 per barrel on Wednesday, after climbing on Tuesday.

The West has accused Russia of weaponising energy, creating a crisis in Europe that could trigger gas and power rationing this winter. Moscow accuses the West of weaponising the dollar and financial systems such as SWIFT in retaliation for Russia sending troops into Ukraine in February.

"The decision is technical, not political," United Arab Emirates Energy Minister Suhail al-Mazroui told reporters ahead of the meeting. "We will not use it as a political organisation," he said, adding that concerns about a global recession would be one of the key topics.

Russian Deputy Prime Minister Alexander Novak, who was put on the US special designated nationals' sanctions list last week, also travelled to Vienna to participate in meetings. Novak is not under EU sanctions.