Oil prices: Brent and West Texas Intermediate crude oil rises after OPEC producers announced production cuts

Hong Kong / Atlanta

Oil prices rose during Asian trading on Monday after OPEC+ producers said they would cut production in a surprise move.

Brent crude, the global benchmark, jumped 4.8 percent to $83.73 a barrel, while West Texas Intermediate crude rose 4.9 percent to $79.36.

Rising oil prices could mean that inflation stays higher for longer, adding pressure to a hot issue for consumers around the world.

On Sunday, Saudi Arabia announced that it would start a “voluntary cut” in its crude oil production, along with other members or allies of the Organization of the Petroleum Exporting Countries (OPEC).

The official Saudi Press Agency quoted an official at the Saudi Energy Ministry as saying the cuts would begin in May and continue until the end of the year.

The cuts come on top of those announced by OPEC+ in October, according to the Saudi Press Agency.

That month, oil producers agreed Cut production by 2 million barrels per day, the largest cut since the start of the pandemic and equivalent to about 2% of global oil demand.

Saudi Arabia now says it will cut oil production by another half a million barrels a day.

Meanwhile, Iraq will cut its production by 200,000 barrels per day, and the United Arab Emirates will cut its production by 144,000 barrels per day.

Kuwait, Algeria and Oman will also cut production by 128 thousand, 48 thousand and 40 thousand barrels per day, respectively.

In a note on Sunday, Goldman Sachs analysts said the move was unexpected but “consistent with the new OPEC+ orthodoxy of acting proactively because they can without significant losses in market share.”

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The total collective production cut by the nine OPEC+ members is 1.66 million barrels per day, analysts said, who raised their Brent price forecast this year to $95 a barrel.

The Saudi Ministry of Energy described its recent cut as a precautionary measure aimed at supporting the stability of oil markets, according to the Saudi Press Agency.

The White House rejected this idea – as well as the recent cuts by OPEC+.

A spokesperson for the National Security Council said: “We don’t think cuts are advisable at this point in time given the uncertainty in the market – and we’ve made that clear.” “We focus on prices for American consumers, not barrels.”

In October, the OPEC+ decision to cut production had already been taken angered the White House.

US President Joe Biden vowed at the time that Saudi Arabia would suffer “consequences”. But so far, his administration appears to have done just that retract his vows To punish the kingdom of the Middle East.

Russia, an OPEC+ member, said on Sunday it would extend Voluntary reduction 500,000 barrels per day until the end of 2023. The move was announced by Russian Deputy Prime Minister Alexander Novak, according to the state news agency TASS.

This decision was less surprising. Goldman analysts said they expected the downgrade to continue into the second half of the year.

— CNN’s Hanna Ziadi and Arlette Sainz contributed to this report.

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