Oil price rises today with OPEC+ production cut – 03/04/2023 – Market

Oil prices rose on Monday (3), registering the biggest daily increase in almost a year, after a surprise announcement by OPEC + (Organization of the Petroleum Exporting Countries and its allies) to cut more production rattled the markets.

Brent oil rose 5.71%, to US$ 84.45 (R$ 429), around 8:10 am (Brasília time) after reaching the maximum in a month, to US$ 86.44 (R$ 439) in the session start.

US crude was up 5.90% at $80.14 (R$407) after hitting the highest level since late January.

OPEC+, including Russia, shook markets by announcing extra production cuts of around 1.16 million bpd (barrels per day) on Sunday (3).

The group, known as OPEC+, was expected to stick to its earlier decision to cut output by 2 million bpd by December at its monthly meeting on Monday.

The pledges bring the total volume of OPEC+ cuts to 3.66 million bpd, according to Reuters calculations, equivalent to 3.7% of global demand.

As a result, Goldman Sachs lowered its OPEC+ end-2023 production forecast by 1.1 million bpd and raised its Brent price forecasts to $95 and $100 508) a barrel for 2023 and 2024, respectively, it said in a note.

The administration of US President Joe Biden said the measure announced by producers was ill-advised and some analysts questioned OPEC+’s justification for the extra cut in production.

“It’s hard to accept ‘precautionary’ and ‘precautionary’ reasoning — especially now, when the banking crisis has eased and Brent has rebounded to $80 from 15-month lows in early March,” said Vandana Hari, founder from oil market analysis provider Vanda Insights.

Russia says oil output cut important to support global prices

The Kremlin said on Monday it was in the interest of the world’s energy industry to support prices for oil and petroleum products, a day after Russia announced it would extend a 500,000 bpd cut in its oil production until the end of the year. Petroleum.

Asked about the US criticism, Kremlin spokesman Dmitri Peskov told reporters: “In this case, it is in the interest of world energy to keep world prices of oil and petroleum products at the right level. This is what you need. focus. Whether other countries are satisfied or dissatisfied — that’s their own business.”

Peskov stated that it is important to keep prices at a certain level because the sector is investment intensive and because in the foreseeable future it is not possible to meet all the countries’ needs from renewable sources.

Asked if Russia had coordinated its actions with OPEC+, he said: “Russia is in constant contact with various states of the organization, this is a normal process, but nothing more. In this case, countries have an independent line, an interest independent in stabilizing the market”.