Reuters reported that oil prices increased by about 3% on September 5 after OPEC+ agreed to cut production. Brent oil price in November increased by 2.72 USD at 95.74 USD/barrel, equivalent to an increase of 2.92%.
Oil prices increased by nearly 4 USD earlier in the same trading session, but decreased after comments from the White House that US President Joe Biden pledged to take all necessary steps to increase energy supply and depreciate.
WTI oil price increased by 2 USD to 88.85 USD/barrel, equivalent to an increase of 2.3% after increasing by 0.3% in the previous session.
The daily reduction of 100,000 barrels by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC+, accounts for only 0.1% of global demand. The group also agreed to be able to meet at any time to adjust production before the next meeting scheduled for October 5.
Its a symbolic message that the group wants to send to the markets more than anything, said Oandas cra cra craft Erlam, adding that OPEC+s 100,000 bar/day increase last month was in disarray.
OPEC's top producer, Saudi Arabia, highlighted last month the possibility of cutting production to address what it sees as excessive oil prices.
Russian Deputy Prime Minister Alexander Novak said that expectations of weaker global economic growth were the reason for Moscow and its OPEC allies' decision to cut oil production.
TASS news agency quoted Russian Energy Minister Nikolai Shulginov as saying that the country is likely to reduce oil production by about 2% this year.
"The bigger picture is that OPEC+ is producing much less than its production targets and this seems unchanged as Angola and Nigeria seem unable to return to pre-pandemic production levels," said Caroline Bain, chief economist for commodities at Capital Economics.
Oil prices have fallen in the past three months from a multi-year high reached in March, amid concerns that rate hikes and COVID-19 precautions in parts of China could slow global economic growth and reduce oil demand.
COVID-19 prevention measures at China's Shenzhen technology hub were relaxed on September 5 as new cases showed signs of stabilizing despite the city remaining highly vigilant.
Meanwhile, negotiations to restore the West's 2015 nuclear deal with Iran have encountered new difficulties. The White House rejected Iran's call for an agreement to stop investigations by the UN nuclear watchdog.
Iran's oil and gas minister said the global energy market needs increased oil supply from Iran. The nuclear deal, if achieved, could become a driver to boost Iran's crude oil supply back to the market.
Analysts said that the use of oil in electricity production is also expected to increase when Russian oil and gas giant Gazprom announced it would stop pumping gas through the Nord Stream pipeline due to the oil leak. The pipeline will be closed until the repair is complete.
The International Energy Agency last month raised its forecast for oil demand for the year, partly because it expects a transition from gas to oil in some countries due to record increases in electricity and gas prices.
