Global oil prices rose after several leading producers, led by Saudi Arabia, surprisingly announced production cuts, AFP reported. Crude futures rose nearly eight percent, a day after several OPEC+ members unexpectedly announced production cuts totaling more than one million barrels a day.
The shock production cuts will begin in May and continue until the end of the year. It involves Algeria, Gabon, Iraq, Kazakhstan, Kuwait, Oman, Saudi Arabia and the United Arab Emirates.
Western European stock indexes rose on Monday as oil and gas stocks rose, reacting to a jump in oil prices, but afternoon statistics reversed the trend for some gauges, which closed in the red.
Oil rose more than 6% to $84.72 a barrel in Monday trading after eight of the 20 OPEC+ countries announced voluntary cuts in oil production from May until the end of the year. According to analysts’ estimates, the total drop in oil production will be approximately 1.657 million barrels per day, of which 500,000 barrels per day will come from Russia and Saudi Arabia, the largest producers.
At the close of trading on the London Mercantile Exchange, US light crude oil (WTI) for April 20 delivery rose 6.07% to $80.26 a barrel, while European Brent for April 28 delivery rose 6.01% to $84.63 a barrel.
“OPEC+’s plan to further cut production could push oil prices back towards the $100 mark, given China’s reopening and Russia’s output cuts in response to Western sanctions,” said the analyst at “CMC Markets” Tina Teng on CNBC.
The shares of the leaders in the oil industry jumped even after the news of the OPEC+ decision, finishing respectively: the British BP Plc (+3.76%), the French TotalEnergies (+5.89%) and the Anglo-Dutch Shell (+4.25%).
The sector’s index of oil and gas companies rose 4 percent as European Brent crude futures and U.S. WTI futures jumped. They were followed by the bank gauge, which rose by 0.6%. However, most of the other sectors were in negative territory, with mining stocks falling the most at 1.3%.
Shares of Italian oil-related companies also rose: oil services company Saipem (+4.35%), industrials Tenaris (+3.02%) and energy Eni (+4.08%).
At the top of the general gauge of “blue chips” in Western Europe, shares of Portuguese oil and gas company Galp Energia rose 7.65%, followed by British oil and gas company Harbor Energy, whose shares rose 6.05%.
However, all other sectors were glowing red. Financial services for example.
Shares in Switzerland’s UBS Group AG jumped 4.1% by midday, but fell 2.88% in late trade amid rumors the Swiss bank is preparing to lay off 20-30% of its workforce amid a merger with rival Credit Suisse on Monday. According to SonntagsZeitung sources, the layoff could affect 25-36 thousand employees from the bank’s total staff, which after the merger is completed will amount to about 120 thousand people.