OPEC meeting: oil price rises sharply after Saudi Arabia cuts production

DThe oil market reacted in early trading on Monday with a temporary spike in prices to the news that Saudi Arabia was unexpectedly cutting daily production by another million barrels, to the lowest level in several years.

“Everything necessary will be done to stabilize this market,” Energy Minister Prince Abdulaziz bin Salman said, referring to the recent drop in prices. Over the weekend, during OPEC+ talks, Russia promised to stop throttling. The United Arab Emirates secured a higher funding quota for 2024.

American WTI crude rose several times by almost 4.6% to $75.06 per barrel. However, at 6:59 am CET, a barrel was worth just $72.75, up 1.4% from Friday night. North Sea oil last traded 1.3% higher at $77.13 a barrel after a 3.4% hike in prices.

According to Vivek Dhar, director of mining and energy commodities analytics at the Commonwealth Bank of Australia, the decline is more of a hedge against losses than driving a sustained rally. The weak economic outlook could definitely return to the market’s focus.

Oil futures prices in New York fell 11 percent last month as concerns about demand, especially in China, put pressure on the market. Most market watchers expected OPEC+ to leave production unchanged.

“Ideally, Saudi Arabia would like prices to be above $80 a barrel,” Vandana Hari, founder of the think tank Vanda Insights, told Bloomberg-TV about Brent oil prices. If the health of the global economy falters, short sellers “will be back in no time,” she predicts.

Source: Frantfurter Allgemeine

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