Stock - OPEC \ OIL
Several member countries are already pumping well below their quotas. Image Credit: WAM

OPEC+ agreed to cut its collective output limit by two million barrels day, delegates said, as the group seeks to halt a slide in oil prices caused by the weakening global economy.

It's the biggest reduction by the Organisation of Petroleum Exporting Countries and its allies since 2020, but will have a smaller impact on global supply than the headline number suggests. Several member countries are already pumping well below their quotas, meaning they would already be in compliance with their new limits without having to reduce production.

A cut of 2 million barrels a day in the group's output target, shared pro rata, would require just eight countries to curb actual production and deliver a real reduction of about 880,000 barrels a day, according to Bloomberg calculations based on September output figures.

Even so, the group’s decision risks adding another shock to a global economy that is already battling inflation driven by high energy costs. Oil prices rose as much as 1.5 per cent in London to $93.20 a barrel, the highest in two weeks.

The move would also irk the US - and potentially trigger a response from Washington. President Joe Biden visited Saudi Arabia earlier this year in search of higher production and lower pump prices for Americans ahead of midterm elections in November.

Earlier on Wednesday, US officials were making calls to counterparts in the Gulf trying to push back against the move to cut production, according to people familiar with the situation.