Oil prices surged 6% on Wednesday after OPEC announced it was cutting production. Oil prices surged 6% on

Key Highlights :

1. World oil prices surged Monday after several top producers led by Saudi Arabia sprang surprise output cuts despite already angering the United States with a similar move last year.

2. The cut will start in May and last until the end of the year, with OPEC+ saying Monday it involves Algeria, Gabon, Iraq, Kazakhstan, Kuwait, Oman, Saudi Arabia and the United Arab Emirates.

3. The news sparked bumper gains for European energy companies and lifted London and Paris stock markets, although Frankfurt dipped.

4. Oil giants enjoyed record profits last year as crude prices soared, but the weekend development also fanned concerns over a fresh spike in consumer prices that could put pressure on central banks to push interest rates even higher - and dent the global economy.

     The Organization of the Petroleum Exporting Countries agreed to cut output by 1.8 million barrels per day in an effort to stabilize prices, but the move was immediately met with skepticism from the United States which said it would not participate in the deal. The price of oil rose by more than 2% on Monday after the announcement, reaching $US51.50 per barrel.

     The cuts, which are set to take place over the next six months, were announced after a meeting in Vienna between the producers and non-OPEC countries. The agreement was seen as a way to prevent the price of oil from reaching $US60 per barrel, which was the target that the producers had set for themselves.

     The United States has been a leading critic of the OPEC oil production cuts, which it has said will only benefit the producers and not the consumers. The country has also accused the producers of price gouging, saying that they are taking advantage of the situation.

     The decision by the producers to make the cuts comes after they agreed to do so last year, but US President Donald Trump refused to participate in the deal and the prices of oil rose. Trump has said that he is not happy with the current state of the oil market, and that he believes that the producers are taking advantage of the situation.

     The president has also said that he plans to increase production in the United States and to bring down the prices of oil.

Continue Reading at Source : fin24