Key Highlights :
Saudi Arabia and other OPEC+ oil producers on Sunday announced further oil output cuts of around 1.16 million barrels per day, in a surprise move that analysts said would cause an immediate rise in prices and the United States called inadvisable. The pledges bring the total volume of cuts by OPEC+, which groups the Organization of the Petroleum Exporting Countries with other producers, to about 2.8 million barrels per day.
The cuts were announced as part of an effort to shore up prices, which have been depressed by oversupply and a global glut of oil. Prices rose on Sunday, but analysts said the cuts would have a much greater impact on the market. The announcement came as a surprise, as Saudi Arabia had been one of the most vocal opponents of production cuts by other producers.
The cuts by OPEC+ are expected to have a significant impact on the market, analysts said. The group's output has already decreased by 1.8 million barrels per day, and the additional cuts could bring that total down to 2.4 million barrels per day by the end of the year. That would be the lowest level of output since the early 1990s.
The cuts are also expected to increase the price of oil, which is currently around $45 per barrel. The price is expected to rise further in the coming months, as the cuts will reduce the available supply of oil. The United States has called the cuts inadvisable, and has said that it will not support them. President Obama has said that he wants to see a sustained increase in the price of oil, so that the economy can benefit from increased energy consumption.
The cuts by OPEC+ are part of an effort to shore up prices. The group's output has already decreased by 1.8 million barrels per day, and the additional cuts could bring that total down to 2.4 million barrels per day by the end of the year.