RIYADH: OPEC+ is considering cutting its output by the most since 2020, a move that Washington is attempting to thwart through diplomatic channels.

The group will discuss using current targets as a starting point and cutting its production limits to 2 million barrels per day. Despite being a big step forward, the real impact on world supply will be less as many countries are already pumping below their quotas. According to those with knowledge of the situation, US officials are calling on their Gulf counterparts to oppose the action.

Also Read: Elon Musk and Gautam Adani lose more than $2 lakh crore in one day

According to representatives, OPEC+ is also looking at making small cuts between 1 million and 1.5 million barrels per day. Even a small cut would be a blow to the global economy which is already reeling from the shock of historic inflation.

As President Joe Biden tries to control pump prices ahead of the midterm election in November, Washington is considering possible responses.

The Biden administration's concern cannot be overstated over a potential rise in oil prices, according to Rapid Energy CEO Bob McNally, who spoke in Vienna. The White House will be upset by a significant OPEC+ cut, but officials can wait to implement policy changes to see how prices react.

It's a special blow to Biden after a trip to Saudi Arabia earlier this year in search of a new oil deal. Additionally, it highlights the tension in US-Saudi relations, while also highlighting how strong the state's ties with Moscow have been throughout the war. Tensions will increase on the diplomatic front when Russia's Deputy Prime Minister Alexander Novak will attend in person in Vienna.

Also Read: Truss claims that her government handled the announcement of tax cuts poorly.

American response

According to Bloomberg on Tuesday, White House officials have already asked the US Department of Energy to investigate whether banning the export of gasoline, diesel and other refined petroleum products would lower prices. While this is a divisive idea, it has been embraced by the Biden administration in some places.

In an effort to undermine Russian President Vladimir Putin's war machine, European and US leaders are working to limit Moscow's oil revenues as OPEC+ ministers meet in Vienna. New sanctions that would severely restrict Russia's ability to sell crude are due to be approved by the European Union, and the US is coordinating with allies to impose price caps on Russian oil.

Oil futures trading saw a boom on Tuesday, and mostly flat trading was seen on Wednesday. According to some analysts, the US may also look at using its strategic petroleum reserves once again to control prices.

According to analysts at JPMorgan, "OPEC+'s move could trigger US countermeasures, including an additional release from the Strategic Petroleum Reserve."

The group's concern about the global slowdown and its impact on demand will be reflected in a significant cut. However, the market impact will actually be less than the headline figure.

This is due to the fact that many members are already pumping well below their permitted quota, which would put them into automatic compliance with their new limits without reducing production. Nevertheless, in 2020 it will be the cartel's biggest cut since the significant cut before the Covid-19 pandemic.

Also Read: Saudi Arabia's real GDP is predicted to increase by almost 8%

UAE Energy Minister Suhail Al Mazrouei told reporters in Vienna on Wednesday that the meeting was important.