OPEC and Russia agree to slash oil output by 2M barrels a day

The Biden administration’s scramble to avoid another surge in US gas prices took a major hit Wednesday after OPEC and Russia approved a significant cut in oil production.

Oil jumped to $87 on Wednesday after the OPEC+, a group of oil-producing nations that includes Russia, slashed output limits by 2 million barrels per day. The cut would mark the largest drop in OPEC+ oil production since 2020 and add additional pressure to global energy markets already reeling from the Russia-Ukraine conflict, Bloomberg reported.

The cuts were approved even after the Biden administration attempted a “full-scale pressure campaign” in a bid to convince OPEC+ not to slash output , CNN reported, citing sources familiar with the matter.

OPEC+ ministers are seeking to bolster the price of oil, which has declined in recent months as fears mount about a potential global recession. Experts had already warned that tightness in energy markets this winter – with Europe on the verge of a full-blown energy crisis – could send oil prices much higher.

Meanwhle, the national average price of a gallon of gas hit $3.83 on Wednesday following days of steady increases. The trend is a political headache for President Biden and other Democrats ahead of midterm elections that will determine which party controls Congress.

Republican lawmakers and other critics accused the Biden administration of prematurely taking credit for falling gas prices as they receded from a record high of $5.016 in June. With prices once again on the rise, there are signs White House officials are scrambling to avert the resulting political backlash.

The White House has tapped the Energy Department to project the impact of a potential ban on experts of US-produced gasoline, diesel and other refined petroleum products, Bloomberg reported.  Domestic oil producers oppose the idea, arguing a ban would disrupt struggling energy markets and only lead to higher prices for American motorists.

Meanwhile, Biden has publicly targeted US oil companies during the recent uptick in prices.

As the destructive Hurricane Ian approached last month, Biden issued “a warning to oil and gas industry executives: Do not — let me, repeat, do not — do not use this as an excuse to raise gasoline prices or gouge the American people.”

As The Post has reported, experts say the Biden administration’s restrictive policy stance on domestic energy producers have exacerbated the price problem.

The OPEC+ cuts mark another snub for the White House. Biden visited Saudi Arabia earlier this year to request additional oil output, but the trip was widely deemed a failure after OPEC only announced a modest increase.

The cut, while sizable, was “less than the market had predicted,” according to Quincy Krosby, chief global strategist at LPL Financial.

“Russia, heavily dependent on income from oil exports, was seeking a much larger cut in order to push prices higher and ensure a stream of revenue to support its war effort,” Krosby said.