() –– Oil prices rose on Monday in Asian markets after OPEC+ producers unexpectedly announced a cut in production.
World benchmark Brent crude rose 4.8% to $83.73 a barrel, while US benchmark WTI rose 4.9% to $79.36.
Rising oil prices could mean inflation stays higher for longer, adding pressure to a hot topic for consumers around the world.
Saudi Arabia announced this Sunday that it would initiate “a voluntary reduction” of its crude production, together with other members or allies of the Organization of the Petroleum Exporting Countries (OPEC).
The cuts will start in May and last until the end of the year, according to a Saudi energy ministry official quoted by the Saudi state news agency SPA.
The reductions are in addition to those announced by OPEC+ in October, according to SPA.
That month, oil producers had agreed to cut production by 2 million barrels a day, the biggest cut since the start of the pandemic and equivalent to about 2% of global oil demand.
Saudi Arabia now says it will cut production by another half million barrels a day.
For its part, Iraq will cut its production by 200,000 barrels per day and the United Arab Emirates by 144,000 barrels.
Kuwait, Algeria and Oman will also reduce their production by 128,000, 48,000 and 40,000 barrels per day, respectively.
rising prices
In a note on Sunday, Goldman Sachs analysts said the move was unexpected but “consistent with OPEC+’s new doctrine to act preemptively because they can without significant losses in market share.”
The collective production cut by the nine OPEC+ members amounts to 1.66 million barrels a day, analysts said, raising their price forecast for Brent this year to $95 a barrel.
The Saudi Ministry of Energy described its latest reduction as a precautionary measure aimed at supporting the stability of oil markets, according to SPA.
The White House rejected this idea, as well as the latest OPEC+ cuts.
“We do not believe that cuts are advisable at this time given the uncertainty in the market, and we have made that clear,” a spokesman for the National Security Council said. “We focus on prices for US consumers, not barrels.”
In October, the OPEC+ decision to cut production already irritated the White House.
US President Joe Biden then promised that Saudi Arabia would suffer “consequences”. But so far, his administration appears to have backtracked on its promises to punish the Middle Eastern kingdom.
Russia, a member of OPEC+, also said on Sunday that it would extend a voluntary reduction of 500,000 barrels per day until the end of 2023. The measure was announced by Russian Deputy Prime Minister Alexander Novak, quoted by the state news agency TASS.
The decision was less surprising. Goldman analysts had forecast that the cut would last into the second half of the year.
— ‘s Hanna Ziady and Arlette Saenz contributed to this report.
