Oil prices: Brent crude, WTI rise after OPEC producers announce production cuts

Hong Kong/Atlanta (CNN) Oil prices rose during Asian trade on Monday after OPEC+ producers said they would cut output in a surprise move.

Global benchmark Brent crude rose 4.8% to $83.73 a barrel, while U.S. benchmark WTI rose 4.9% to $79.36.

Rising oil prices mean inflation will remain high for longer, adding pressure to a hot-button issue for consumers around the world.

On Sunday, Saudi Arabia announced it would join other members or allies of the Organization of the Petroleum Exporting Countries (OPEC) to begin an “involuntary reduction” in crude oil production.

Saudi state-run news agency SPA reported that the cuts will begin in May and last until the end of the year, an official at the Saudi energy ministry said.

According to SPA, these cuts are on top of those announced by OPEC+ in October.

That month, oil producers had agreed To cut production by 2 million barrels per day, the biggest cut since the pandemic began and equivalent to 2% of global oil demand.

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

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

Kuwait, Algeria and Oman will cut production by 128,000, 48,000 and 40,000 barrels per day respectively.

Price rise

In a Sunday note, Goldman Sachs analysts said the move was unexpected, but “needs to act early to comply with the new OPEC+ principle, as they can do without significant losses in market share.”

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Analysts said the combined production cut by OPEC+’s nine members was 1.66 million barrels a day, raising their price forecast for Brent this year to $95 a barrel.

Saudi Arabia’s Ministry of Energy described its latest cut as a precautionary measure aimed at supporting the stability of oil markets, SPA said.

The White House has pushed back on that idea — as well as OPEC+’s recent cuts.

“Given the market uncertainty we don’t think cuts are a good idea at this time – we’ve made that clear,” a spokesman for the National Security Council said. “We’re focused on prices for the American consumer, not barrels.”

In October, OPEC+’s decision to cut production was already in place Sorted out the White House.

US President Joe Biden then promised that Saudi Arabia would face “consequences”. But so far, his administration seems to have Go back on its vows To punish Middle Eastern government.

Russia, a member of OPEC+, also said on Sunday it would extend it Voluntary reduction 500,000 barrels per day by the end of 2023. Russian Deputy Prime Minister Alexander Novak announced the move, state-run news agency TASS reported.

That result was less surprising. Goldman analysts predict the cut will continue into the second half of the year.

— CNN’s Hanna Ziady and Arlette Saenz contributed to this report.

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