Oil prices rise by more than $2/bbl as OPEC+ eyes huge output cut
SINGAPORE (ICIS)–Oil prices jumped more than $2/bbl on Monday, fueled by expectations that oil cartel OPEC and its allies (OPEC+) would introduce a hefty production cut to bolster the market.
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Several news agencies, citing unnamed sources, reported over the weekend that OPEC and its allies including Russia, collectively known as OPEC+ will consider an oil output cut of more than a 1m bbl/day at their 5 October meeting.
“If this comes to pass, it will be the biggest move yet since the COVID-19 pandemic,” Singapore-based UOB Global Economics & Markets Research said in a note.
OPEC+ in early September agreed to modestly cut production by 100,000 bbl/day.
Russia had proposed last week a 1m bbl/day supply cut but there have been no suggestions from other members on the potential size of any output cuts, according to Dutch banking and financial services firm ING.
“In August, OPEC+ production was estimated at around 3.37m bbl/day below target production levels. So in reality, any cut in supply will likely be smaller than whatever figure the group announces,” it said.
Oil prices have continued to fall sharply since June this year because of global economic growth concerns, a stronger US dollar and worries over continued lockdowns in China amid the country’s zero-COVID policy.
In the third quarter, Brent crude plunged by 23% while US WTI shed by 25% during the period. Brent crude touched a nine-month low of $83.65 a barrel on 26 September.
Focus article by Nurluqman Suratman
Thumbnail image: At a petrol station in Beijing, China, 29 October 2021. (By WU HONG/EPA-EFE/Shutterstock)
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