Crude oil futures finished lower Tuesday for a second straight day, surrendering a bit more of last week’s big gains, as a downgrade to the International Monetary Fund’s 2023 world economic outlook added to worries about a global economic slowdown.
The IMF downgraded its outlook for the world economy, forecasting growth of just 2.7% next year, down from the 2.9% it had estimated in July.
Front-month Nymex crude (CL1:COM) for November delivery settled -1.9% to $89.35/bbl, and December Brent crude (CO1:COM) ended -2% to $94.29/bbl.
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President Biden is re-evaluating the U.S. relationship with Saudi Arabia after OPEC+ announced plans to cut oil production, White House national security spokesman John Kirby said Tuesday, as the move “benefited Russia at a time when nobody in any capacity should be trying to benefit Vladimir Putin.”
According to a story in today’s Wall Street Journal, Biden administration officials urged Saudi officials to delay the decision on a production cut by another month, warning that a cut would weaken support in Washington for the kingdom.
Saudi officials dismissed the requests, which they viewed as a political gambit to avoid bad news ahead of the U.S. midterm elections, and instead the kingdom leaned on its OPEC allies to approve the 2M bbl/day cut, WSJ reported.
U.S. officials reportedly were blindsided by the size of the production cut, believing OPEC+ would reduce output by just 1M bbl/day.
With relations sinking to their lowest in decades, U.S. lawmakers are now pondering ways to punish the Saudis, including suspending arms sales to the kingdom and backing a bill that would allow the Justice Department to sue Saudi Arabia and other OPEC nations for illegal price fixing.