Oil rises after OPEC+ extends output cuts

A flare burns excess natural gas in the Permian Basin in Loving County, Texas, U.S. Nov 23, 2019.  REUTERS/Angus Mordant//File photo

Oil prices rose on Monday after OPEC+ members agreed to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter, largely in line with market expectations.

Brent futures was 28 cents, or 0.3 percent higher, at $83.83 a barrel at 0134 GMT, while the U.S. West Texas Intermediate (WTI) rose 20 cents, or 0.3 percent, to $80.17 a barrel.

The output cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are expected to cushion the market amid global economic concerns and rising output outside the group, with Russia’s announcement surprising some analysts.

READ:  OPEC+ producers extend oil output cuts to second quarter

Russia will cut its oil output and exports by an additional 471,000 barrels per day (bpd) in the second quarter, in coordination with some OPEC+ participating countries, its Deputy Prime Minister Alexander Novak said on Sunday.

Tightness in supply

“Signs of tightness in the physical market continue to push crude oil higher. Output cuts by the OPEC+ alliance continue to reduce supply as the market worries about the renewed tensions in the Middle East,” ANZ analysts said in a note on Monday.

Rising geopolitical tensions due to the Israel-Hamas conflict and Houthi attacks on Red Sea shipping have supported oil prices in 2024, although concern about economic growth has weighed.

READ:OPEC+ agrees to deepen voluntary oil output cuts

Yemen’s Iran-backed Houthis vowed on Sunday to continue targeting British ships in the Gulf of Aden following the sinking of UK-owned vessel Rubymar.

In some of the strongest comments by a senior U.S. leader, U.S. Vice President Kamala Harris on Sunday demanded Palestinian militant group Hamas agree to an immediate six-week ceasefire while forcefully urging Israel to do more to boost aid deliveries into Gaza.

Washington has insisted the ceasefire deal is close and has been pushing to put in place a truce by the start of Ramadan, a week away. A U.S. official on Saturday said Israel has agreed on a framework deal.