Why Did OPEC Slash Oil Production?

Welcome to today’s Morning Brief, where we’re looking at OPEC’s decision to curtail oil production, Iran’s growing dissent, and Yemen’s expired truce.

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The Biden administration has accused OPEC+, a cartel of top oil producers, of siding with Russia after the group decided to slash oil production to drive up prices—theoretically benefiting Moscow, which is deeply reliant on its oil export revenues. 

But the group’s agreement to slash output by 2 million barrels per day likely wasn’t motivated by politics—even if it ultimately undermined U.S. interests.

Instead, energy analysts say top oil producers are bracing for a potential recession, during which both demand and prices would likely plummet. Boosting the price of oil now, they say, could help shield producers from that gloomy future economic outlook.

OPEC+ is “looking at market sentiment and fears of an impending recession and what that will do to demand—and has decided to get out ahead of the curve,” said Raad Alkadiri, an energy expert at Eurasia Group. 

This is a “proactive move to stop a further fall in prices,” he added. 

The cuts were a harsh wake-up call for U.S. President Joe Biden, who has desperately tried to coax top producers into pumping more oil to drag down prices. In July, he made a controversial trip to Saudi Arabia that ended with a highly criticized fist bump with Crown Prince Mohammed bin Salman, who spearheaded OPEC+’s latest move. 

These frantic efforts continued into recent days, when top Biden officials scrambled—and ultimately failed—to talk countries out of reducing oil production ahead of the group’s Wednesday meeting, CNN reported. 

OPEC+’s decision is a “smack in the face” to the Biden administration from the Saudis, Alkadiri said, who added that some senior officials “have deluded themselves into believing that somehow they can get the Saudis to do their bidding, and that is no longer the case.”

Washington, which called the move “shortsighted,” has now pledged to make 10 million barrels of oil from the Strategic Petroleum Reserve available in November. 

Iran’s growing dissent. Iran’s demonstrations have escalated over reports that a 16-year-old girl, Nika Shahkarami, was found dead after attending a protest. Her aunt said she called her friend to report that police were chasing her and then went missing; 10 days later, she was found at a morgue, BBC Persian reported. Shahkarami’s aunt and uncle have reportedly been arrested while Iranian officials maintain she fell off a roof and was not imprisoned. 

Tehran has now also stationed police at several universities to stifle growing dissent. “I am even scared to leave the campus. Lots of police vans are waiting outside to arrest students,” a student told Reuters.

Yemen’s expired truce. Tim Lenderking, the U.S. envoy to Yemen, has urged Houthi rebels to compromise in cease-fire negotiations, after the involved parties missed the Oct. 2 deadline to extend the original truce. The Houthis made “maximalist and impossible demands,” he said. 

Aid groups warned that the deal’s expiration could have grave humanitarian consequences. “The end of the truce is terrible news,” said Ferran Puig, Oxfam’s Yemen country director. “Millions will now be at risk if airstrikes, ground shelling, and missile attacks resume.”

Tensions in East Asia. South Korea and the United States have responded to North Korea’s recent spate of ballistic missile tests with their own joint missile drills—although one of Seoul’s missiles crashed into land, sparking panic among some locals. Afterward, officials apologized and vowed to investigate what happened. 

Nigeria’s freed hostages. Twenty-three people who were abducted more than half a year ago while aboard a train in Nigeria have now been released, Nigerian officials said on Wednesday. No one has owned up to the March train attack, which killed seven people. Authorities have not explained how they secured the hostages’ freedom or if ransom payments had been required. 

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Ugandan President Yoweri Museveni has apologized to the public after his son, Muhoozi Kainerugaba, a senior general, wrote a series of unusual tweets declaring that it wouldn’t take “2 weeks to capture Nairobi” in an apparent threat to attack Kenya. After facing backlash, he encouraged Kenyans to “relax.” 

Kainerugaba also named his bride price to marry Giorgia Meloni, Italy’s expected new prime minister. “I would give her 100 Nkore cows immediately! For being fearless and true!!” he tweeted alongside a photograph of the far-right politician.

“I know Europeans give girls they like flowers? I have never understood it,” he added. “In our culture you give a girl you like a cow.”