OPEC's Production Cuts Cause Concern Among Oil-Importing Countries, US Caught Off Guard

Oil production cuts by OPEC members, including Saudi Arabia, have caused concern among oil-importing countries, particularly the United States. The cuts, aimed at raising oil prices in the face of a potential drop in demand, total 1.16 million barrels per day and are set to commence next month and last until the end of the year. In response, the US National Security Council speaker, John Kirby, admitted the cuts took the US by surprise.

Meanwhile, in Iraq, the federal government and the Kurdistan Regional Government (KRG) signed a deal to resume northern oil exports, a move that was welcomed by the US. The KRG Prime Minister, Masrour Barzani, travelled to Baghdad to finalize the agreement with Prime Minister Mohammed al-Sudani. The deal gives Iraq’s state-owned marketing company, SOMO, the authority to market and export KRG oil, with the revenues deposited in an account at the Iraqi Central Bank under the control of the KRG. Baghdad will have the ability to audit the account.

In Venezuela, the new representative of the opposition in the United States, Fernando Blasi, is calling on the Biden administration to ease the oil sanctions on Nicolas Maduro’s government. Blasi believes that if the sanctions remain, Venezuela is at risk of becoming another Cuba and Washington could be blamed for the country’s increasing authoritarianism and economic hardships. This represents a shift from the opposition’s previous “maximum pressure campaign” that relied on the US to remove Venezuel from power.

The Biden administration has signalled its willingness to provide sanctions relief in exchange for concrete steps by the Venezuelan government, such as promising not to ban any candidate emerging from opposition primaries later this year. The administration has also issued a license to US multinational Chevron to resume limited oil production in Venezuela on a six-month trial basis. However, the majority of the sanctions inherited from the Trump administration remain in place.