The international prices of Petroleum soared on Monday, posting their biggest daily rise in nearly a year, after a shock announcement from the OPEC regarding will cut production would shake the markets.
He Brent crude It was trading at $84.53 a barrel at 11:15 a.m. Greenwich Mean Time, up $4.64, or 5.8%, after hitting its highest in a month at $86.44. He West Texas Intermediate (WTI) crude oil US oil was trading at $80.23 a barrel, up $4.56, or 6%, after touching its highest level since late January.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, rocked markets by announcing further cuts on Sunday to their production target of about 1.16 million barrels a day.
“What we are witnessing is an adaptable and agile OPEC+ group that is capable and willing to act ahead of events” (Schieldrop)
The group, known as “OPEC+,” was expected to stick to its earlier decision to cut output by 2 million barrels a day through December at its monthly meeting on Monday. The commitments bring the total volume of OPEC+ cuts to 3.66 million barrels per day, equivalent to 3.7% of global demand.
As a result of the announcement, Goldman Sachs It lowered its OPEC+ production forecast for end-2023 by 1.1 million barrels per day and raised its Brent price forecasts to $95 and $100 a barrel for 2023 and 2024, respectively, it said in a note.
The Biden government said the measure announced by producers was inadvisable and some analysts questioned OPEC+’s justification for the additional production cut.
“What we are witnessing is an adaptable and agile OPEC+ group that is capable and willing to act ahead of events. The recent market turbulence, in which Brent crude fell as low as $70 a barrel, probably spooked OPEC+ a bit,” he said. Bjarne SchieldropSEB chief commodity analyst speaking to Reuters.
Brent last month fell towards USD 70 a barrel, the lowest level in 15 months, on fears that the global banking crisis and the rise in interest rates will affect demand, despite lower production of OPEC oil in March due to the interruption of some exports from Iraq.
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On Sunday Saudi Arabia, United Arab Emirates (UAE), Kuwait, Iraq and Oman announced that, starting in May and until the end of 2023, they will apply a “voluntary” reduction in additional oil production to that already agreed at the OPEC meeting at the end of last year, official sources reported.
“[El recorte se ha decidido para] meet the challenges facing the world oil market and achieve a balance between supply and demand” (OPEC)
In this way, Saudi Arabia will apply an additional reduction of half a million barrels per day, the Emirates 144,000 barrels per day, Kuwait 128,000 barrels per day, Iraq 211,000 and Oman 40,000, according to the official news agencies of these countries.
They also pointed out that these “voluntary” reductions They have been decided “in coordination with some other participating countries” of OPEC+, which they did not specify.
Last October, the OPEC countries gave the green light to reduce crude oil production by two million barrels per day until the end of 2023.
“This voluntary cut is in addition to the reduction in production agreed at the thirty-third Ministerial Meeting” of OPEC+ held last October, indicated the Saudi and Emirati agencies, adding that this “precautionary measure” has the objective of “supporting stability of the oil market.
The Iraqi Oil Ministry, for its part, indicated that the cut has also been decided to “face the challenges facing the world oil market and achieve a balance between supply and demand.”
He also recalled that this new measure was taken “so that it does not contradict the previous reduction policy.”
This decision comes on the eve of a committee of the OPEC+ oil alliance, led by Saudi Arabia and Russia, to assess in a teleconference whether the current market situation justifies a readjustment of their joint crude supply.
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Source-www.infobae.com