Oil prices surged earlier this week on the back of OPEC+’s surprise decision to cut production in October.
West Texas Intermediate crude rose 4.1% to above $90 a barrel before pulling back some gains. The Organization of the Petroleum Exporting Countries and allies including Russia plan to cut output by 100,000 barrels per day next month. The move effectively reverses a symbolic increase in output of the same that was made in September in response to lobbying by U.S. President Joe Biden.
Saudi Arabia said after the meeting that the group will remain proactive after agreeing. OPEC+’s first production cut in more than a year.
“Last month’s adjustment met consumer demand, and this monthly adjustment is just a small response to producers’ concerns,” said Standard Chartered analyst Emily Ashford. “The continuation of the monthly format enables OPEC+ to make small but reactive adjustments to market conditions.”
- WTI crude for October delivery rose 2.3% to $88.83 a barrel at 1:35 p.m. in New York.
- The price climbed to $90.39 earlier.
EU chief diplomat downplays chances of a quick resumption of the Iran nuclear deal, suggesting the country’s supplies are unlikely Come back to the market soon. Josep Borrell told reporters on Monday, “If the aim was to get the deal done quickly, it wouldn’t happen.”
Some traders are also still willing to bet on a sharp rise in prices. Brent January call options were trading at $200 on Monday, with WTI trading at $124 and $125 on Friday. Those contracts will profit if crude prices surge in the coming months.
– with the assistance of Yongchang Chin and Devika Krishna Kumar.