OPEC+ weighs biggest output cut since 2020

Prices fall on weaker Chinese demand, surging US dollar rate

HOUSTON:

Oil prices jumped $3 a barrel on Monday as OPEC+ considered reducing output by more than 1 million barrels per day (bpd) to buttress prices with what would be its biggest cut since the start of the Covid-19 pandemic.

Brent crude futures for December delivery rose $2.99 to $88.13 a barrel, a 3.5% gain, by 1650 GMT. US West Texas Intermediate crude rose $3.33, or 4.2%, to $82.82 a barrel.

Oil prices have declined for four straight months since June, as Covid-19 lockdowns in top energy consumer China hurt demand while rising interest rates and a surging US dollar weighed on global financial markets.

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, is considering an output cut of more than 1 million bpd ahead of Wednesday’s meeting, OPEC+ sources have told Reuters.

That figure does not include additional voluntary cuts by individual members, one OPEC source added. Most traders were expecting cuts of about 50,000 bpd, said Dennis Kissler, senior vice president of trading at BOK Financial. If agreed, it will be the group’s second consecutive monthly cut after reducing output by 100,000 bpd last month.

Published in The Express Tribune, October 4^th, 2022.

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