Saudi Arabia and other OPEC+ oil producers have announced further reductions in output of approximately 1.16 million barrels per day, a move that analysts say will cause an imminent increase in prices and that the United States deemed undesirable.
The pledges increase the total volume of cuts by OPEC+, which includes the Organization of Petroleum Exporting Countries, Russia, and other allies, to 3.66 million barrels per day, or 3.7% of global demand, according to calculations by Reuters.
The development on Sunday occurs one day prior to a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia, and which had been anticipated to adhere to the 2 million bpd of cuts already in place until the end of 2023.
Oil prices reached $70 per barrel last month, the lowest level in 15 months, due to concerns that a global banking crisis would impact demand. Despite this, it was not anticipated that OPEC+ would take further action to support the market, as this possibility was downplayed by sources and crude prices recovered towards $80.
The latest reductions could increase oil prices by up to $10 per barrel, and an immediate increase is anticipated once trading resumes on Monday.
Last October, OPEC+ agreed to a 2 million bpd output limit beginning in November and lasting through the end of the year, a move that infuriated Washington as tighter supply increases oil prices.