Oil stabilizes after expected OPEC+ cut extension, Brent crude at $83.74/bbl
Oil prices remained relatively stable on Monday, following the anticipated decision by the OPEC+ producer group to extend voluntary output cuts until the middle of the year.
Brent futures saw a modest increase of 19 cents, reaching $83.74 per barrel at 1422 GMT, following a 2.4% increase the previous week. Similarly, U.S. West Texas Intermediate (WTI) prices rose by 6 cents to $80.03 per barrel, building on a 4.6% gain from the previous week.
The extension of voluntary oil output cuts, totaling 2.2 million barrels per day (bpd), by the Organization of the Petroleum Exporting Countries and its allies (OPEC+), aims to stabilize the market amidst global economic uncertainties and increasing production levels outside the group.
What’s driving crude oil prices?
- Jorge Leon, a senior vice president at consultancy Rystad Energy, stated that the OPEC+ cuts would result in reduced production from the group, projecting a decrease to 34.6 million barrels per day (bpd) in the second quarter. This contrasts with earlier forecasts suggesting that output could surpass 36 million bpd in May as producers gradually reverse supply cuts.
- However, the unexpected announcement from Russia to further reduce its oil output and exports by an additional 471,000 barrels per day (bpd) in the second quarter caught some analysts off guard. This additional cut by Russia is closely linked to a decline of 400,000 bpd in the country’s refinery operations, primarily attributed to Ukrainian drone strikes targeting refining facilities across Russia, as stated by Viktor Katona, the lead crude oil analyst at Kpler.
- Geopolitical tensions, including the Israel-Hamas conflict and Houthi attacks on Red Sea shipping, have bolstered oil prices in 2024. However, concerns about economic growth have exerted downward pressure.
- The Iran-backed Houthis from Yemen reaffirmed their intent on Sunday to target British ships in the Gulf of Aden, following the recent sinking of the Rubymar cargo ship.
(With inputs from Reuters)
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Published: 04 Mar 2024, 09:58 PM IST
