© Archyde.com. Pumps operate inside an oil field in California, USA, on January 17, 2022. Photo: Lucy Nicholson-Archyde.com.
LONDON (Archyde.com) – Oil prices rose nearly $3 a barrel on Tuesday on expectations that the OPEC+ group may agree to a significant cut in crude production when it meets this week, as a weaker dollar made oil purchases cheaper.
The producers of the OPEC+ group appear intent on cutting production when they meet on Wednesday, putting pressure on supplies in an oil market that energy executives and analysts say is already tight due to strong demand, lack of investment and supply problems.
Brent crude futures rose $2.94, or 3.3 percent, to settle at $91.80 a barrel.
US West Texas Intermediate crude futures closed up $2.89, or 3.5 percent, to $86.52 a barrel.
Sources from OPEC +, which includes Russia, said the bloc was considering cutting production by more than 1 million barrels per day. Oil extended its gains after Bloomberg reported that OPEC+ was considering a two million barrel per day cut.
Kuwaiti Oil Minister Mohammad Al-Faris said on Tuesday that the group would take the appropriate decision to serve the interests of producers and consumers.
OPEC+ boosted production this year after record cuts in 2020 due to the demand hit caused by the Corona pandemic. But the organization failed in the past few months to meet the planned increases in production, as production fell from the target rate in August by 3.6 million barrels per day.
And oil prices were also boosted by a tendency to incur a fifth consecutive daily loss against a basket of currencies, with investors expecting the Federal Reserve to slow the pace of raising interest rates.
The US central bank’s easing of its hawkish policy would allay some fears of a recession in the US, which in turn could dampen demand for oil.
Meanwhile, a senior US Treasury official said that the Group of Seven sanctions on Russia will be implemented in three phases, the first targeting Russian oil, then diesel, and then low-value products.
The G7 and European Union sanctions, which will be in two phases, are scheduled to start on December 5.
(Prepared by Mohamed Ali Farag and Ahmed El-Sayed for the Arab Bulletin – Edited by Mustafa Saleh)