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As production cuts did not produce the desired outcome, what will be the next move by the OPEC+?

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Falling oil prices in 2022

With the ever diminishing room for manoeuvre, the OPEC+ is left with a very few choices to make, in order to the appease the oil producers, as the latest move did not produce the desired outcome. On the contrary, its de facto leader, Saudi Arabia, just appeared to have antagonized the long-term ally, the US - at least, judging by the reactions of the Biden administration over the move. 

The substantial output cut, announced on October 5, did not push the price up as expected: perhaps the real production cut may be much smaller than 2 million bpd as announced. In addition, the release of crude stocks from the SPR, Strategic Petroleum Reserve, even in the absence of a strategic reason to do so, does affect the sentiment of the markets to some extent. The OPEC+, however, may find it really difficult to announce yet another production cut to achieve the same goal, without corresponding consequences from the US.

Anthony Blinken, the Secretary of State, has already said that Saudi Arabia and UAE cannot compensate for the production cut by helping Ukraine with financial aid!

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