On Monday, a group of some of the biggest oil producers in the world decided to reduce their output somewhat starting next month, shocking the energy markets at a time when they were already in a lot of turbulence.
The key energy alliance known as OPEC+, which consists of OPEC and non-OPEC allies, resolved to reduce output targets starting in October by around 100,000 barrels per day.
Energy analysts had generally anticipated that the corporation will stick to its production strategy.
Just 100,000 barrels per day were added to oil output by OPEC+ last month. The modest increase was widely interpreted as a rejection by U.S. Vice President Joe Biden, who had visited Saudi Arabia to persuade the OPEC leader to increase output in order to reduce prices and support the global economy.
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The upward adjustment was "intended just for the month of September," according to OPEC+, therefore the decision to return to August production levels on Monday was made. The next OPEC+ meeting is scheduled on October 5.
The price of oil significantly increased on Monday. International benchmark Brent oil prices rose by 3.9% to $96.6 per barrel at 3 p.m. local time, while U.S. West Texas Intermediate futures rose by about 4% to $90 per barrel.
After reaching multi-year highs in March, oil prices have dropped by nearly 25% since early June. The decline has been attributed to growing concerns that rising interest rates and COVID-related restrictions in some regions of China could slow global economic growth and lower.
Investors in the market are currently closely monitoring the potential for a rise in Iranian oil supply should Tehran be successful in obtaining a new version of the 2015 nuclear accord.
