Oil prices rose, on Friday, and headed for gains for the second week in a row, supported by the decision of OPEC + to make the largest supply cut since 2020, despite concerns about recession and high interest rates.
The cut decided by the OPEC + cartel, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, comes before the European Union bans Russian oil and will reduce supplies in a market already suffering from tight supply.
Brent crude rose 1.2 percent to $95 a barrel. US West Texas Intermediate crude also rose 1.1 percent to $89.4 a barrel.
“One of the main consequences of the recent OPEC cuts will be the likely return to the $100 oil price … but the gains will be limited in light of the increasing unfavorable economic factors,” said Stephen Brennock of BVM oil brokerage.
The two benchmarks are heading to record gains for the second week, and Brent crude is close to recording an eight percent rise this week. But it is still significantly lower after approaching an all-time high of $147 a barrel hit in March after Russia’s invasion of Ukraine.
The dollar’s rise added to pressure on oil prices, amid statements from Federal Reserve officials (the US central bank) indicating that the bank will continue to tighten monetary policy sharply.
A stronger dollar makes oil more expensive for holders of other currencies, and affects oil and other risky assets.
Markets are awaiting the US non-farm payrolls report, which will be released later on Friday.
On Thursday, US President Joe Biden expressed his disappointment with the plans of OPEC +. He and other officials said the United States was studying all possible alternatives to prevent price hikes. (Archyde.com)