Oil prices rose on Wednesday, after OPEC+ agreed to the deepest cuts to oil production since the 2020 Covid pandemic at a meeting in Vienna on Wednesday, curbing supply in an already tight market despite pressure. of the United States and others to pump more.
The cut could spur a recovery in oil prices that have fallen below $90 from $120 three months ago on fears of a global economic downturn, rising US interest rates and a stronger dollar.
North Sea Brent crude rose $1.57, or 1.7%, to $93.37 a barrel. The contract hit a session high of $93.96, its highest level since September 15.
The American West Texas Intermediate (WTI) gained 1.43%, to settle at 87.76 dollars a barrel. It reached $88.42 during the session, the highest since September 15.
For its part, the Mexican export mix gained 1.94% to 81.33 dollars a barrel.
The United States had pressed OPEC not to proceed with the cuts, arguing the fundamentals do not support them, a source familiar with the matter said.
The White House accused OPEC+ of “aligning itself” with Russia, announcing the use of an additional 10 million barrels in November from its strategic reserves.
The decision comes as Europe is undergoing an unprecedented energy crisis and energy prices play a central role in driving up inflation worldwide.
The sources said it was unclear whether the cuts could include further voluntary reductions by members such as Saudi Arabia, or whether they could include the group’s existing underproduction.
In August, OPEC+ was unable to meet the 3.68 million barrels per day (mbd) target, in particular due to the inability of Russia, Nigeria and Angola to reach their peaks.
“Higher oil prices, if fueled by sizeable production cuts, would likely rankle the Biden administration ahead of the US midterm elections,” Citi analysts said in a note.
“There could be more political reactions from the US, including additional strategic reserve releases, along with some wild cards including further encouragement of a NOPEC bill,” Citi said, referring to a US antitrust bill against OPEC. .
JPMorgan expects Washington to implement countermeasures by releasing more reserves.
Saudi Arabia and other OPEC+ members have said they seek to avoid volatility rather than target a particular price.
accusations
The West has accused Russia of weaponizing energy, creating a crisis in Europe that could trigger gas and power rationing this winter.
Moscow, for its part, accuses the West of weaponizing the dollar and financial systems like SWIFT in retaliation for sending Russian troops to Ukraine in February.
Part of the reason Washington wants to lower oil prices is to deprive Russia of oil revenues, while Saudi Arabia has not condemned Moscow’s actions.
Relations have been strained between the kingdom and the government of Biden, who traveled to Riyadh this year but failed to secure any firm commitments to cooperation on energy.
“The decision is technical, not political,” UAE Energy Minister Suhail al-Mazroui told reporters before the meeting.
Russian Deputy Prime Minister Alexander Novak, who was placed on the US Special Designated Nationals sanctions list last week, also traveled to Vienna to participate in the meetings. The official is not under EU sanctions.
The market was also supported as U.S. crude inventories fell 1.4 million barrels in the week ended September 30 to 429.2 million barrels, versus analyst expectations polled by a Reuters poll of an increase of 2.1 million barrels.
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