Major oil producers around the world have announced a steep cut to oil production at an OPEC+ meeting on Wednesday. OPEC+ leaders said 2 million barrels of oil per day will be slashed from production. That is the biggest cut since the beginning of the pandemic. The announcement has ignited fears of higher gas prices around the globe. The reduction is equivalent to about 2% of global oil demand.
The U.S. was adamant in their position against the slowing of oil production. The Biden administration told Middle Eastern allies of OPEC to vote against the oil production slowdown. This week, oil prices in the U.S. already increased in anticipation of the outcome from Wednesday’s meeting. President Biden was met with questions from CNN on Wednesday before departing the White House for Florida.
“I need to see what the detail is,” Biden said. “I am concerned, it is unnecessary.”
It wouldn’t only be the U.S. facing serious ramifications since the oil-rich countries decided to slow supply: The price of oil would sharply increase around the globe. In Europe, countries are already burdened by an energy crisis. OPEC+ members, like Russia and Saudi Arabia, will likely see gains from an oil supply cut. Less supply and more demand means more money for regions with oil.
Not only is economic fallout a potential consequence in the U.S. from Wednesday’s decision, but so is political fallout. Inflation and the economy have remained the top concern for voters in several polls. If gas prices spike again, it could mean trouble ahead of midterms now five weeks away.