FM4: Schubert on OPEC Production Reduction
Dr. Samuel R. Schubert commented on FM4’s news magazine show Reality Check today, Dec. 1, about the recent decision by OPEC member countries to reduce oil production by 1.2 million barrels per day on the condition that non-OPEC countries reduce production by 600,000 barrels per day, in order to increase oil prices.
Dr. Schubert noted that this was a significant compromise between Saudi Arabia and Iran, as “Saudi Arabia has done everything it could to maintain market share, and by allowing Iran to increase its production and Saudi Arabia to cut its production, then of course, you can derive from it that Saudi Arabia feels that it has less pull on Iran now that Iran has some of the sanctions lifted.”
He also raised the question that Russia, a top energy producing country that is not a member of OPEC, has a basic agreement with OPEC to reduce its production by 300,000 barrels per day, but for how long will it do so? This depends on how quickly the oil prices can increase. He also noted that no one knows right now which countries will decrease production to meet the other 300,000 barrels per day required to meet the conditions of the OPEC agreement. The upcoming Dec. 9 meeting between OPEC and non-OPEC oil producing countries may shed light on this.
When asked about how this reduction will affect energy consumers around the world, he stated that countries with fewer taxes on petroleum (like the United States) will be affected by the projected oil price increase, but “it will have a lesser effect in Europe, where high taxes are essentially accounting for most of the price that the consumer pays.” If prices were to increase by 20 or 30 percent, then prices at the pumps in Europe will likely rise as well.
You can listen to the full segment here.
Dr. Schubert is Assistant Professor in the International Relations Department. He was recently appointed Interim Associate Director of Webster Vienna Private University. He is an expert on U.S. Foreign Policy, Middle Eastern Studies, Terrorism and Energy Security. Dr. Schubert appears regularly on major national and international media outlets.