In an interview with the website of the Strategic Council on Foreign Relations, Dr. Mitra Rahnejat, referring to the decision of OPEC+ to cut 2 million barrels of daily oil production, stated: OPEC+, which was formed in 2016, includes 23 oil-exporting countries that by holding regular meetings decide on the supply of crude oil to the world market. At the center of this group there are 13 OPEC member countries that produce 30 percent of the world crude oil, and Saudi Arabia is at the top of them with the production of more than 10 million barrels of oil per day.

She added: While the price of oil in the world market had dropped from 120 to 90 dollars since June, OPEC+ decision to cut 2 million barrels of oil production led to a one percent increase in oil prices, and the price of Brent crude oil per barrel jumped by 3.8 percent to 96 dollars and 70 cents. This decision was taken after the OPEC+ Joint Technical Committee estimated that this year’s oil market surplus will reach 900,000 barrels per day, which is 100,000 barrels higher than the committee’s previous estimate.

Remembering that the West, especially the United States, is facing price increases and inflation caused by the consequences of the war in Ukraine, the university faculty member said: This price increase benefits all oil-exporting countries, but Moscow will benefit more than other countries. In fact, due to the war in Ukraine and the increase in energy prices and Europe’s dependence on receiving energy from it, Russia will benefit from new equations in the world market. Of course, Saudi Arabia will be among countries that will benefit from this.

Rahnejat added: Although the US administration made widespread efforts to reduce the increase in oil prices with the cooperation of Saudi Arabia on the eve of mid-term congressional elections, in order to reduce domestic inflation, Saudi Arabia by explaining that this reduction is equivalent to 2 percent of the global supply and is essential to respond to the increase in interest rate in the West and a weak global economy, has left the US request unanswered. This caused Saudi Arabia to be accused of complicity with Russia in a “short-sighted measure”.

Assistant Professor of the Department of Political Economy and Public Policy, Faculty of Law and Political Science, Allameh Tabataba’i University, regarding the consequences of such OPEC+ measure, especially despite the increase in inflation in Europe and the US and energy pressure on European countries, said: The decision to reduce production was made when the Biden administration had given reports to the Saudi government stating that there was no need for such measure and even requested that Saudi Arabia remain patient until the next OPEC meeting; but this request was ignored by Saudi Arabia and the OPEC+ decision was condemned by the Biden administration and the US Congress.

US attempt to retaliate against Saudi Arabia

He continued: Although Saudi Arabia announced that this decision had only an economic, but no political, aspect against the United States, the Biden administration will try to retaliate against such decision. In this context, a group of lawmakers in the United States is preparing a punitive plan for Saudi Arabia, which includes no sale of weapons to that country.

Rahnejat pointed out that there are even a series of bilateral agreements and investments in the fields of energy, cyber and maritime security, as well as the integrated air defense system, which are subject to revision. In addition to them, the Biden administration has decided to release 10 million barrels of its strategic reserves in order to prevent the increase in oil prices, which has caused concern about the unprecedented decrease in the strategic reserves of the United States.

The international economic expert added: Riyadh does not think that the US will take any serious action to harm this relationship based on the presence of 8,000 Americans in Saudi Arabia who are engaged in activities; but it seems that it is not easy for the US administration, which is leading the global coalition against Russia in attacking Ukraine and considers Saudi Arabia to be an important partner in this campaign, to accept such a decision from Saudi Arabia.

Imposing ceiling on oil prices, cutting production, Europe’s challenges

The assistant professor of Allameh Tabataba’i University pointed out the challenges that Europe has faced due to the reduction of gas transmission from Russia and the increase in energy prices on the eve of winter, adding: With an aim of reducing Moscow’s income, the European Union is preparing to approve the eighth package of sanctions against Moscow, which includes imposing a ceiling on the price of Russian oil. In this situation, Europe evaluated this measure by the OPEC+ against the direction of its policies.

Rahnejat, by saying that while Europe is looking to diversify its energy supply sources, Iran and Venezuela are still left out of this list due to US sanctions, clarified: In this situation, although research has shown that imposing a ceiling on the price of Russian oil could deprive the Kremlin of tens of billions of dollars annually, this ceiling makes the logistics of oil trade more difficult and raises prices. In addition, this plan relies on the participation of other non-EU countries that buy Russian energy.

At the same time, she pointed to the remarks of the minister of finance of Indonesia, who said that the US efforts to impose price restrictions led OPEC+ to reduce production, and when the price ceiling applied for geopolitical purposes, no one knows which country could be the next option, adding: However, there is still doubt about the possibility of a real reduction in production; while most OPEC+ members regularly fall short of their production quota due to lack of investment, they do not really need to reduce production. In fact, it is estimated that the actual reduction in production will be only about one million barrels per day.

According to the university faculty member, the decline in global economic growth can also face this OPEC+ effort with failure.