Oil prices surged as much as 8% at the open after OPEC+ announced it was slashing output by 1.16 million barrels per day.
, saying it was a “precautionary measure” targeted toward stabilizing the oil market.until the end of 2023, according to the country’s Deputy Prime Minister Alexander Novak.
In addition to Saudi Arabia’s output cut of 500,000 barrels per day, other member states have also pledged cuts: the, while Kuwait, Oman, Iraq, Algeria and Kazakhstan will also be reducing output. “The selected involvement of the largest OPEC+ members suggest that adherence to production cuts may be stronger than has been the case in the past,” Commonwealth Bank of Australia’s Vivek Dhar said in a note.“OPEC+‘s plan for a further production cut may push oil prices toward the $100 mark again, considering China’s reopening and Russia’s output cuts as a retaliation move against western sanctions,” CMC Markets’ analyst Tina Teng told CNBC.
Teng noted, however, that the cut could also reverse the decline in inflation, which would “complicate central banks’ rate decisions.”as traders feared the banking rout could dent global economic growth.“They’re looking into the second half of this year and deciding they don’t want to relive 2008,” said Bob McNally, president of Rapidan Energy Group, citing oil prices crashing from $140 to $35 in six months in that year.
McNally added that while it’s not his base case, oil prices could “make a dash for $100 … if Chinese demand goes back to 16 million barrels a day second half of this year [and] if Russian supply starts to go off because of sanctions and so forth,”According to Wood Mackenzie,
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