The United States is nudging the Organization of the Petroleum Exporting Countries and its allies, known as the OPEC+ nations, to avoid significant oil output cuts when President Joe Biden is seeking to prevent U.S. gasoline prices from rising, reported Reuters.
What Happened: Washington is arguing with OPEC+ that economic fundamentals don’t support an output cut, reported Reuters, citing sources.
Oil prices have been falling over the last four months, dragged by fears of a global recession after central banks worldwide tightened their policy rates aggressively to rein in inflation. However, prices soared over 3% on Monday after reports indicated the OPEC+ is likely to consider an output cut of over a million barrels per day in the fresh trading week.
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The United States Brent Oil Fund (NYSE: BNO) closed 3% higher on Tuesday, while the Vanguard Energy Index Fund ETF (NYSE: VDE) closed over 4%.
White House Press Secretary Karine Jean-Pierre said they would not comment on any OPEC action until the Organization acts. “In any event, we will continue to take steps to protect American consumers. Our focus — and it’s been very clear for the past several — several months — has been on taking every step to ensure markets are sufficiently supplied to meet the demand for a growing global economy,” she said.
Why It Matters: An increase in oil prices could potentially impact Democratic prospects during the Nov. 8 midterm congressional elections, the report said. OPEC+ had reduced its output by 100,000 barrels per day in September.
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