Oil prices soared this Monday (3), after the announcement, this weekend, by OPEC members of a drastic production cut, since May 2022, to make prices rise.
Eight of the 23 members of the OPEC+ alliance, which brings together the Organization of Petroleum Exporting Countries (OPEC) and ten other partners, decided to reduce their extraction volumes by 1.16 million barrels a day, starting with Saudi Arabia.
The announcement shook the market, which expected a status quo. Up until the time of the meeting, the Saudis “signalled publicly and privately” that they “did not intend to intervene for now”, recalled Eurasia Group analysts.
The production cut announced on Sunday by Iraq, Algeria, Saudi Arabia, United Arab Emirates, Oman, Kazakhstan and Kuwait will take effect in May and will be maintained until the end of the year.
For its part, Russia announced on Sunday that it will extend the production cut by 500,000 barrels a day until the end of the year.
The announcements came ahead of a videoconference meeting of an alliance ministerial panel.
The group assured that this is “a precautionary measure that aims to sustain price stability in the oil market”.
But, for analysts, it is, above all, about obtaining additional “revenues”, commented in a note Jorge Leon, from Rystad Energy.
These cuts show that OPEC+ will do everything to “defend base prices above $80 a barrel”, without worrying about criticism from the United States and other major consumers worried about galloping inflation, added the analyst.
Due to the banking crisis, oil prices fell to their lowest level in a year in March, a quota “unacceptable for the members of OPEC +”, summarized to AFP Ibrahim al-Ghitani, oil market specialist based in the United Arab Emirates.
After that decision, the North Sea Brent barrel, a reference in Europe, for delivery in May, closed at a high of 6.3%, at US$ 84.93 in London.
West Texas Intermediate (WTI), the US benchmark for May, rose 6.27% to $80.42 in New York.
During today’s journey, both barrels rose more than 8%.
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