Riyadh – Oil prices spiked this Monday (3) after several important players in the market, such as Saudi Arabia, Iraq, and Russia, announced a cut in production as a “precautionary measure” after the recent price drop. At 10:30 GMT, the North Sea Brent barrel rose 5.14% to USD 84, and the WTI advanced 5.31% to USD 79.69. In the first hours of negotiations, the two indices reached a peak of almost 8%. Pictured above, an Iraqi refinery.
The production cut announced this Sunday (2) by Iraq, Algeria, Saudi Arabia, the United Arab Emirates, Oman, Kazakhstan, and Kuwait will take effect in May and continue until the end of the year. The measure implies a reduction in the pumping of one million barrels a day. Russia also announced on the same day it would extend its oil production cut by 500,000 barrels per day until late 2023.
The announcements came ahead of a video conference meeting of a ministerial panel from the Organization of the Petroleum Exporting Countries (OPEC+) and its allies, a conglomerate led by Saudi Arabia and Russia. The United States government defends the increase in production in the face of high demand, with China reactivating its economy after lifting COVID-19 pandemic restrictions. The announcement sparks anxieties about persistent inflation and pressures central banks to raise interest rates.
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Translated by Elúsio Brasileiro
