As OPEC+ contemplates lowering output by more than 1 million barrels per day (bpd) to support prices with what would be its greatest reduction since the beginning of the COVID-19 crisis, oil prices increased by more than $4 on Monday.
By 9:50 a.m. EDT, Brent oil futures were up $4.38, or 5.1%, to $89.52 per barrel (1350 GMT). At $84.28 per barrel, U.S. West Texas Intermediate oil was up $4.79, or 6%.
Since June, oil prices have fallen for four straight months as COVID-19 lockdowns in China, the world’s largest energy user, impacted demand while weighing on international financial markets due to increasing interest rates and a strengthening U.S. currency.
Before their meeting on Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) and their allies, often known as OPEC+, are reportedly mulling a production reduction of more over 1 million bpd to sustain prices.
One OPEC source said that extra voluntary cutbacks made by certain countries are not included in that number.
If accepted, it will be the group’s second straight month of output reductions after a 100,000 bpd decrease last month.
“After a year of tolerating extremely high prices, missed targets and severely tight markets, the (OPEC+) alliance seemingly has no hesitation when it comes to acting rapidly to support prices amid a deterioration in the economic outlook.”
According to two sources from the producer group, OPEC+ missed its production goals by around 3 million bpd in July as sanctions on some members and limited investment by others hindered efforts to increase output.
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