Oil prices jump as OPEC+ accepts small production cut | OPEC News

OPEC+ leaders Saudi Arabia and Russia have said demand for oil has been falling for several months.

Oil prices rose about 3% on Monday as OPEC+ members agreed to a small production cut of 100,000 barrels per day to support prices.

Brent crude futures for November delivery rose $2.72 to $95.74 a barrel, a gain of 2.92%.

Prices had climbed almost $4 earlier in the session, but were tamed by comments from the White House that US President Joe Biden was engaged to take all necessary measures to ensure the supply of energy and lower price.

U.S. crude rose $2 to $88.85 a barrel, up 2.3% after a 0.3% gain in the previous session, on low volumes during the Labor Day holiday in the states. -United.

The 100,000 barrel per day (bpd) cut by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, represents just 0.1% of global demand. The group also agreed that they could meet at any time to adjust production before the next meeting scheduled for October 5.

“That’s the symbolic message the group wants to send to markets more than anything,” said Oanda analyst Craig Erlam, adding that last month’s 100,000 bpd hike by OPEC+ was not considered a big problem.

“What we’ve probably seen in the markets is pricing in most worst-case scenarios,” Erlam added.

Last month, Saudi Arabia, OPEC’s top producer, signaled the possibility of output cuts to deal with what he sees as an exaggerated drop in oil prices.

Russian Deputy Prime Minister Alexander Novak said expectations of weaker global economic growth were behind the decision by Moscow and its OPEC allies to cut oil production.

Russian Energy Minister Nikolai Shulginov said the country would most likely cut its oil production by around 2% this year, TASS news agency reported.

“The bigger picture is that OPEC+ is producing well below its production target and that is unlikely to change given that Angola and Nigeria, in particular, appear unable to return to pre-production levels. the pandemic,” said Caroline Bain, chief commodities economist at Capital. Economy, says.

Oil prices have fallen in the past three months from multi-year highs reached in March, under pressure from fears that interest rates will rise and Brakes COVID-19 in parts of China could slow global economic growth and reduce demand for oil.

Lockdown measures in southern China’s tech hub Shenzhen eased on Monday as new infections showed signs of leveling off, though the city remains under high vigilance.

Meanwhile, talks to revive the 2015 nuclear deal between the West and Iran, potentially providing increased supply of Iranian crude returning to the market, have hit a new snag. The White House on Friday rejected Iran’s call for a deal to be tied to the end of investigations by the UN’s nuclear watchdog, a Western diplomat said.

Iran’s Oil Minister said the global energy market needs an increase in the supply of Iranian oil.

Oil use in power generation is also expected to rise, analysts said, as Russia’s state-controlled Gazprom said Friday it would. stop pumping gasoline via the Nord Stream 1 pipeline due to a fault.

Last month, the International Energy Agency raised its forecast for oil demand for the year, in part because it expects a switch from gas to oil in some countries due to record oil prices. natural gas and electricity.

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