At the beginning of August, the OPEC oil alliance agreed to increase daily oil production. But because oil prices are falling, countries want to cut production again in October. The announcement comes as a surprise, the market reacts immediately.
The major oil nations of the OPEC group are lowering their production target again slightly after the increases in recent months. According to an online meeting of oil ministers from around 20 countries, the combined daily production for October will be reduced by 100,000 barrels (159 liters each). This reverses the recent expansion in production by Saudi Arabian and Russian dominated Opec. The group pointed to falling oil prices due to fears of a global recession.
Although it is only a slight throttling, the step is still surprising. Observers had instead expected a slight increase in production. In view of the supply cuts that were in the air and were finally decided, oil prices rose. On Monday afternoon, a barrel of North Sea Brent cost $96.64. That was $3.62 more than on Friday. The US variety West Texas Intermediate (WTI) gained $3.12 to $89.99.
The price premiums at the start of the week follow what were in some cases significant reductions in the past week. The main reasons for this are the gloomy economic prospects and the correspondingly weak expected demand for oil, petrol and diesel. In addition, the determined fight against inflation by many central banks is weighing on oil prices, as the higher interest rates in many places are depressing the mood on the financial and commodity markets.
At the beginning of August, the cartel had agreed to increase the daily volume by 100,000 barrels to almost 44 million barrels in September. This corresponds to around 44 percent of global production. In the months before, OPEC had already turned on the oil taps in larger steps.
