HomeBusinessOil jumps nearly $4 as OPEC+ weighs biggest output cut since 2020

Oil jumps nearly $4 as OPEC+ weighs biggest output cut since 2020

  • OPEC+ considers cut of more than 1 mln bpd sources
  • Rate hikes, strong dollar weigh on markets
  • EU ban on Russian maritime oil trader before December 5

LONDON, Oct. 3 (Reuters) – Oil prices rose nearly $4 Monday as OPEC+ considers cutting production by more than 1 million barrels per day (bpd) to prop up prices on what would be the largest cut since the start of the COVID-19 pandemic.

Brent crude futures were up $3.46, or 4.1%, to $88.60 a barrel at 0915 GMT. US West Texas Intermediate crude rose 4.3%, or $3.39, to $82.88.

Oil prices have fallen for four straight months since June as COVID-19 lockdowns in China, the largest energy consumer, have pushed demand down, while rising interest rates and a rising US dollar weighed on global financial markets.

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To support prices, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are considering a production cut of more than 1 million barrels per day ahead of Wednesday’s meeting, OPEC+ sources told Reuters . read more

If agreed, it will be the group’s second consecutive monthly cut, having cut production by 100,000 bpd last month.

“The background for this week’s meeting is precarious, but oil fundamentals are relatively sound,” said Peter McNally, global lead for energy at investment research firm Third Bridge.

“The two biggest question marks are the demand outlook (especially in China) and what will happen to Russia’s supply after the EU ban comes into effect on December 5.”

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OPEC+ missed its production targets of nearly 3 million barrels per day in July, two producer group sources said, as sanctions against some members and low investment by others hampered its ability to increase production. read more

While fast Brent prices could rise further in the near term, concerns about a global recession are likely to limit the benefit, according to consulting firm FGE.

“If OPEC+ decides to cut production in the near term, the resulting increase in OPEC+ spare capacity is likely to put more downward pressure on long-term prices,” it said in a note Friday.

The dollar index fell for the fourth consecutive day on Monday after hitting a two-decade high. A cheaper dollar could boost oil demand and support prices.

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Reporting by Noah Browning Additional reporting by Florence Tan and Muyu Xu Editing by David Goodman

Our standards: The Thomson Reuters Trust Principles.

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