UAE among members of Organisation of Petroleum Exporting Countries (OPEC) Plus announced a surprise cut in oil production that will exceed one million barrels a day….reports Asian Lite News
Oil prices have surged and surpassed USD 85 per barrel after several of the world’s largest oil exporters announced surprise cuts in production.
This is the first time since March 7 that the price of futures contracts of Brent crude oil surged. The price of futures contracts of Brent crude oil for June 2023 delivery on London’s ICE surpassed USD 85 per barrel, Russian News Agency TASS reported.
As of 1:09 am Moscow time on Monday, the price of Brent oil went up by 6.43 per cent to USD 85.03 per barrel, it was reported.
By 1:12 am (Local Time), Brent was trading at USD 85.41 per barrel (6.46 per cent). The price of futures contracts of WTI crude oil for May 2023 delivery went up by 6.21 per cent, to USD 80.37 per barrel.
The increase came after Saudi Arabia, Iraq and several Gulf states said on Sunday they were cutting output by more than one million barrels a day.
Oil prices soared when Russia invaded Ukraine in February 2022, but are now back at levels seen before the war began.
However, the US has been calling for producers to increase output in order to push energy prices lower.
High energy and fuel prices last year helped to drive up inflation – the rate at which prices rise – putting pressure on many households’ finances.
The reduction in output is being made by members of the OPEC+ oil producers. The group accounts for about 40 per cent of all the world’s crude oil output, the BBC reported.
Saudi Arabia is reducing output by 500,000 barrels per day and Iraq by 211,000. The UAE, Kuwait, Algeria and Oman are also making cuts.
A Saudi energy ministry official said the move was “a precautionary measure aimed at supporting the stability of the oil market”, the official Saudi Press Agency said.
Nathan Piper, an independent oil analyst said the move by OPEC+ appeared to be an attempt to keep the oil price above $80 a barrel in the medium term, given that demand could be hit by a weakening global economy and sanctions have had a “limited impact” on restricting Russian oil supplies, the BBC reported.
UAE Minister of Energy and Infrastructure Suhail bin Mohammed Al Mazrouei announced that the country will voluntarily cut its oil output by 144,000 bpd, effective May through the end of 2023, in coordination with some countries that are parties to the OPEC+ agreement.
“This voluntary initiative is a precautionary measure taken to ensure market balance and comes in alignment with the production cut agreed upon during the 33rd OPEC and non-OPEC Ministerial Meeting (ONOMM), held on 5th October 2022,” the minister said in a statement. OPEC+ is scheduled to hold the Meeting of the Joint Ministerial Monitoring Committee (JMMC), on Monday via video conferencing.
Meanwhile, Iraq will voluntarily cut oil production by 211,000 barrels per day (bpd) from May until the end of this year, the country’s Oil Ministry said in a statement.
The move is a “precautionary measure” taken in coordination with some countries of OPEC+, the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, to stabilise the global oil market, it added on Sunday.
Ministry data show that Iraq is producing more than 4.5 million bpd, Xinhua news agency reported.
Oil prices have risen since the outbreak of the Russia-Ukraine war in February last year, benefiting oil-exporting countries, including Iraq. However, oil prices declined in the past few months due to fears of lower demand in global markets.
Iraq’s economy relies heavily on crude oil exports, which account for more than 90 per cent of its revenue.
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