Oil prices have reportedly surged after Saudi Arabia and other OPEC+ providers made an unexpected round of supply cuts, a potentially troubling sign for inflation across the globe just days after a decrease in US price data had improved market stability.
Brent oil prices surged $4.30 to $84.19 a barrel on reports that supply would be reduced by approximately 1.16 million barrels a day, while the price of US crude climbed $4.17 to $79.84.
The move comes just before a virtually convened ministerial panel meeting between the OPEC+, which also involves Russia and Saudi Arabia.
According to Vivek Dhar, an energy analyst at CBA, the participation of the larger OPEC+ members shows that commitment to production cutbacks may be higher than what has previously been the case.
That implies that global oil production may be reduced by up to 1%, or more, beginning in May, depending on the oil markets.
According to the CEO of investment company Pickering Energy Partners, the most recent decreases might increase oil prices by $10 a barrel.
Goldman Sachs increased its Brent projection to $95 per barrel by the end of the year as well as $100 in 2024.
According to Goldman Sachs, the unexpected cut is in line with the latest OPEC+ policy to act proactively in order to do so without significantly losing market share. Although unexpected, this downsizing is a result of significant economic and possibly political factors.
The sharp increase in energy prices partially obscured the slower-than-expected estimate for underlying US inflation on Friday, which had helped Wall Street close the month on a high note. This week's central bank conferences in New Zealand and Australia are expected to see the latter raise interest rates by yet another quarter point to 5%.
After 10 straight raises, markets are betting that the Reserve Bank of Australia (RBA) will halt its tightening drive, although analysts are less in agreement over whether it will still climb.
Source credit: https://www.aljazeera.com/economy/2023/4/3/oil-prices-surge-after-opecs-surprise-output-cuts