At Amber Warrick
Investing.com – Crude oil prices jumped on Monday after OPEC+ unexpectedly cut production to stabilize an oil market hit by recession prospects and the banking crisis of the past few weeks.
West Texas futures jumped 5.2% or $5 to $84.08 a barrel, the highest level in nearly a month, while West Texas Intermediate futures edged up 5% to $79.55 per barrel, close to the levels seen at the end of January.
OPEC+, the cartel formed by the Organization of the Exporting Countries of and allies, said on Sunday evening that production will be reduced by about 1.16 million barrels per day (bpd), denying when previous expectations for a maintenance of production levels decided at the last meeting.
The cut comes on top of the cartel’s October decision to cut output by 2 million bpd, on top of the 500,000 bpd reduction promised by Russia, bringing the total reduction from the market to 3.66 million bpd.
Cartel-leading Saudi Arabia accounts for the bulk of the latest 500,000 bpd cut, followed by a 211,000 bpd cut from Iraq and a 144,000 bpd cut from the Emirates United Arab.
The move, unexpectedly announced on Sunday, comes ahead of a virtual meeting of the OPEC Ministerial Monitoring Committee scheduled for Monday.
After the cut, investment bank Goldman Sachs (NYSE:NYSE:) raised its Brent price forecast by $5 to $95 a barrel by December 2023, while the Biden administration said the cuts of OPEC “are not advisable and that it will continue to focus on reducing gasoline prices for consumers. In this sense, the White House has released over 100 million barrels of crude oil from the Strategic Petroleum Reserve from 2022 to today.