The Organization of Oil Producing Countries decided to cut production, triggering market concerns about tightening supply, and international oil prices rose for five consecutive trading days.
As of the close of business on October 8, Beijing time, the price of WTI crude oil futures for delivery in November rose 4.74% to close at US$92.64/barrel; the price of Brent crude oil futures for delivery in December rose by 3.71% to close at US$97.92/barrel. .
So far, stimulated by the news of OPEC+’s substantial production cuts, international oil prices have risen for five consecutive trading days this week and set the largest weekly increase since March this year: WTI crude oil has risen from below 80 US dollars per barrel. When it reached above US$90/barrel, the cumulative increase reached 16.5%, and Brent oil also increased by more than 10%.
On October 5, local time, the Organization of the Petroleum Exporting Countries and its oil-producing allies (OPEC+) held a ministerial meeting in Vienna and decided to lower the organization’s oil production from the August baseline starting in November 2022. 2 million barrels per day. Affected by this news, international oil prices continued to rise.
On October 7, Haitham al-Ghais, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), said in an interview that the production reduction targets reached by OPEC+ oil-producing countries will help them release more supply in times of crisis. Saudi Arabia’s Energy Minister previously stated that OPEC+’s production cuts are necessary in response to sharp interest rate increases in Europe and the United States and the weakening global economy.
After OPEC+ decided to cut production, the U.S. government criticized the oil-producing country organization for being short-sighted and disappointing. In order to calm market fluctuations, the White House said it would continue to release strategic crude oil reserves.
The U.S. Department of Energy announced on its official website on October 7 that it had sold 10.15 million barrels of strategic petroleum reserves to eight companies, including Marathon Petroleum and Equinor. The release of the Strategic Petroleum Reserve is part of a plan to sell 180 million barrels of oil reserves previously announced by US President Biden. Deliveries of crude oil products will begin in November.
Francisco Blanch, head of global commodities and derivatives research at Bank of America, said that after OPEC+ slashed production, the White House did not have many remaining options to curb rising oil prices and its impact on consumers. In the long run, releasing crude oil reserves will strengthen OPEC+’s leadership in the global crude oil market.
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