Oil price rises more than $3 as OPEC+ assesses biggest production cut since 2020

Oil prices rose more than $3 on Monday (3), as OPEC+ considers cutting production by more than 1 million barrels per day (bpd) as a way to support prices with what would be its biggest cut since the beginning of the Covid-19 pandemic.

Brent crude futures were up $3.56, or 4.18%, at $88.70 a barrel at 8:40 am ET. U.S. crude (WTI) was up 4.52%, or $3.59, to $83.08.

Oil prices have fallen for four straight months since June as demand hampered by Covid-19 lockdowns in China, the world’s top energy consumer, while rising interest rates and a rising dollar weighed on global financial markets.

To support prices, OPEC (Organization of Petroleum Exporting Countries) and its allies, collectively known as OPEC+, are considering a production cut of more than 1 million bpd ahead of Wednesday’s meeting, OPEC+ sources told Reuters.

That figure does not include additional voluntary cuts by individual members, an OPEC source added.

If agreed between producing countries, it would be the group’s second consecutive monthly cut, following a 100,000 bpd reduction in production last month.

“The backdrop for this week’s meeting is poor, but oil fundamentals are relatively healthy,” said Peter McNally, global energy leader at investment research firm Third Bridge.

“The two biggest question marks are the demand outlook (especially in China) and what happens to Russian supply after the EU ban goes into effect on Dec.