The OPEC+ countries are cutting oil production by 1.16 million barrels per day. According to the Saudi energy minister, this unexpected intervention is “to support the stability of the market”.
The production cut was announced on the eve of a meeting of Opec+ ministers. An expert quoted by the news agency Reuters, says the measure could lead to a “meaningful” price increase. “We are likely to see a price increase of $10 a barrel,” said Dan Pickering of investment firm Pickering Energy Partners. A higher oil price could help Russia finance the war in Ukraine.
In October last year, Opec+ had decided to cut production by 2 million barrels until the end of the year. An angry US president Joe Biden had then promised that the decision would have “consequences” for Saudi Arabia.
The new measure will take effect from May. Saudi Arabia is leading the way by cutting its output by 500,000 barrels by the end of this year. The United Arab Emirates, Kuwait, Iraq, Oman and Algeria are also reducing volumes.
Russia stated on Sunday that a unilateral production cut of 500,000 barrels per day, announced in February, will be extended until the end of 2023. The US government had seen that unilateral measure as a signal that the relationship between the Kremlin and the OPEC countries was weakening. . But that appears not to be the case for the time being.
The banking crisis caused a further fall in oil prices last month, to the lowest point in the past 15 months. But now prices have started to rise again. A barrel of North Sea oil was quoted just under $ 80 per barrel on Friday. Most experts therefore had not expected a change in production volume.
