• Download the Constitution of Pakistan
  • Advertise
WRITE FOR US
Economy.pk
No Result
View All Result
  • Economy
  • Politics
  • Technology
  • Education
  • Life & Style
  • Health
  • World
  • Videos
  • Economy
  • Politics
  • Technology
  • Education
  • Life & Style
  • Health
  • World
  • Videos
No Result
View All Result
Economy.pk
No Result
View All Result
Home Business

OPEC+ Announces Surprise Output Cuts, Sending Oil Prices Soaring by $5 per Barrel

by Suneela Zulfiqar
April 3, 2023
in Business
Reading Time: 2 mins read
OPEC+ Announces Surprise Output Cuts, Sending Oil Prices Soaring by $5 per Barrel
Share on FacebookShare on Twitter

The sudden declaration by OPEC+ to further reduce output in what top producer Saudi Arabia called a precautionary measure to protect market stability sent oil prices soaring on Monday.

Brent crude reached its highest price in a month at $86.44 earlier in the day. By 03:47 GMT, it was trading at $84.26 a barrel, up $4.37 or 5.5%. US West Texas Intermediate crude hit its highest level since late January earlier today and was trading at $79.90 per barrel, up $4.23 or 5.6%.

By announcing production cutbacks of around 1.16 million barrels per day on Sunday, the Organisation of the Petroleum Exporting Countries (OEPC) and their allies, notably Russia, shocked the markets. At its monthly meeting on Monday, the group known as OPEC+ was anticipated to uphold its earlier choice to reduce oil production by 2 million bpd until December.

According to calculations by Reuters, the pledges raise the overall oil output cuts by OPEC+ to 3.66 million bpd, or 3.7% of global demand. As a result, Goldman Sachs increased its Brent price projections for 2023 and 2024 to $95 and $100 a barrel, respectively, and decreased its OPEC+ production forecast for end-2023 by 1.1 million bpd.

According to Goldman, the output decrease may raise oil prices by 7%, increasing Saudi Arabia’s and OPEC+’s oil revenues. The OPEC oil cuts, according to the Biden administration, were a bad idea. The justification for OPEC+’s further production cut was contested by certain analysts.

Since the banking crisis has subsided and Brent has slowly climbed back up near $80 from its 15-month lows earlier in March, Vandana Hari, founder of oil market monitoring company Vanda Insights, said it is difficult to understand the “pre-emptive” and “precautionary” reasoning.

Despite lower OPEC oil supply in March owing to oilfield maintenance in Angola and a stop in some of Iraq’s exports, Brent slid last month towards $70 a barrel, the lowest in 15 months, on worries that a worldwide banking crisis and increasing interest rates would hurt demand.

According to RBC Capital analyst Helima Croft, “Today’s move, like the October cut, can be viewed as another unambiguous signal that Saudi Arabia and its OPEC partners would strive to short circuit further macro sell-offs and that Jay [Jerome] Powell is not the only central banker that matters.”

The underlying fact is that the major policy efforts of Washington and Riyadh simply have different pricing targets.

The decision was made later than anticipated, according to JP Morgan analysts, and the tardy response to lower prices would have a minimal effect on overall balances and could prolong the price impact. They stated that “since November, our global oil supply-demand balance revealed that a substantial governmental response was needed to keep global oil surpluses in check.”

Meanwhile, US crude production rose in January to 12.46 million barrels per day (bpd), the highest since March 2020, Energy Information Administration (EIA) data showed on Friday.

Tags: latestOPEC+RussiaSaudi Arabia
Suneela Zulfiqar

Suneela Zulfiqar

Related Posts

Inter-bank: rupee weakens further, settles at 286.88 against US dollar

Inter-bank: rupee weakens further, settles at 286.88 against US dollar

The Pakistani rupee fell for the fourth consecutive session, falling 0.11% against the US dollar in the interbank market on...

USAID announces $16.4mn for Sindh’s flood affectees

USAID announces $16.4mn for Sindh’s flood affectees

The United States Agency for International Development (USAID) announced an additional $16.4 million in development and humanitarian aid for flood...

Google Glitch Causes Confusion Among Netizens Regarding Rupee-Dollar Exchange Rate

Google Glitch Causes Confusion Among Netizens Regarding Rupee-Dollar Exchange Rate

A technical malfunction on Google Search showed a significant drop in the value of the US dollar compared to the...

Petrol levy rate may rise to Rs60 per litre

Petrol levy rate may rise to Rs60 per litre

The government is considering raising petrol levy rates to a record Rs60 per litre on petroleum goods, which might further...

Pakistan hopes to sign IMF deal before budget: Bloomberg

Pakistan hopes to sign IMF deal before budget: Bloomberg

In its last-ditch effort to resurrect the delayed International Monetary Fund (IMF) loan, Pakistan hopes to get $2 billion in...

Govt to ‘hike’ taxes on cell phones other imported items in FY23-24 budget

Govt to ‘hike’ taxes on cell phones other imported items in FY23-24 budget

In the fiscal year 2023-24 budget, the federal government proposes raising taxes on cell phones, automobiles, and other imported luxury...

Next Post
Ishaq Dar to visit Washington to attend IMF, WB meetings

FM Ishaq Dar to visit Washington to attend IMF, WB meetings

Recent Posts

  • Govt settles to continue PM’s relief package at utility stores
  • Inter-bank: rupee weakens further, settles at 286.88 against US dollar
  • USAID announces $16.4mn for Sindh’s flood affectees
  • PM nominates Najam Sethi as candidate for PCB Chairman
  • Pakistan Cricket Board clears the air amid reports of Asia Cup 2023 boycott

Advertisement

Twitter

Economy.pk

Economy.pk is a source of economic, political, business, finance, health and sports updates.

Categories

  • Economy
  • Politics
  • Technology
  • Education
  • Life & Style
  • Health
  • World
  • Videos

Privacy & Legal

  • Privacy Policy
  • Cookies

Social Media

  • Facebook
  • Instagram
  • Twitter
  • Linkedin
  • About
  • Advertise
  • Contact

© 2023 Economy.pk

No Result
View All Result
  • VIDEOS
  • World
    • Europe
    • Americas
    • Asia
    • Oceania
    • Africa
    • Middle East
  • Finance
  • Politics
  • Business
    • Economy
    • Finance
    • Entrepreneurship
    • Real Estate
  • Technology
    • Cyber Security
    • Mobiles
    • Social Media
  • Education
  • Sports
  • Life & Style
    • Personalities
    • Art
    • Culture
    • History
    • Entertainment
    • Fashion
    • Food
    • Health
      • Environment
      • Fitness
  • Sponsored

© 2023 Economy.pk