OPEC+ Surprise Announcement of Further Production Cuts Boosts Oil Prices
Oil prices surged by around $5 per barrel in Monday’s opening trading, following a surprise announcement by OPEC+ that they would reduce production further in support of market stability.
Brent crude rose to $84.95 per barrel, the highest in nearly a month, a 6.3% increase or $5.06. US West Texas Intermediate crude also jumped to $80.47 per barrel, a 6.3% increase or $4.80, and the highest since late January.
OPEC+ – which includes the Organization of the Petroleum Exporting Countries and their allies like Russia – had been expected to maintain their earlier decision to cut output by 2 million barrels per day until December.
However, they announced production cuts of about 1.16 million barrels per day on Sunday, surprising the markets. This brings the total volume of cuts by OPEC+ to 3.66 million barrels per day, equivalent to 3.7% of global demand.
According to Reuters calculations, Goldman Sachs has lowered its end-2023 production forecast for OPEC+ by 1.1 million barrels per day, while raising their Brent price forecasts to $95 and $100 a barrel in 2023 and 2024, respectively.
