International oil prices soared on the 2nd (local time) after OPEC+, which consists of member countries and major oil producers, announced that they would cut production by 1.6 million barrels per day.
According to CNBC, the price of Brent crude oil futures soared 5.07% to $83.95 per barrel on the day. US West Texas Intermediate (WTI) also rose 5.17% to $79.59 per barrel. At one point during the intraday, it soared 8%.
Saudi Arabia announced on the same day that it would voluntarily reduce its crude oil production by 500,000 barrels per day from May to the end of 2023.
Russia’s Deputy Prime Minister for Energy Alexander Novak also announced that the cut in production by 500,000 barrels per day through June would be extended to the end of the year. This marks two extensions of production cuts that Russia first announced in February.
In addition, the United Arab Emirates (UAE), Kuwait, Iraq, Oman and Algeria have also put forward plans to reduce their own crude oil production one after another.
By the end of 2023, the UAE has announced plans to cut 144,000 barrels per day, Kuwait by 128,000 barrels per day, Iraq by 211,000 barrels, Oman by 40,000 barrels per day and Algeria by 48,000 barrels per day.
Ting Teng, an analyst at CMC Markets, told CNBC that OPEC+’s plan to further cut production could push oil prices back to the $100 level given China’s reopening of the economy and Russia’s production cuts in retaliation for Western sanctions.
OPEC+ sources pointed out that the move following the 2 million barrels per day cut agreed in October was related to concerns about the stability of financial markets following the collapse of Silicon Valley Bank (SVB).
The Saudi Energy Ministry said in a statement that the voluntary production cut was a precautionary measure to support stability in the oil market.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.