Oil prices saw a significant surge on Monday after OPEC+ producers announced an unexpected decision to cut output. Brent crude, which is considered the global benchmark, rose by 5.31%, reaching $84.13 a barrel, while the US benchmark, WTI, saw a 5.48% increase, reaching $79.83 a barrel. The decision to cut production is a pre-emptive measure, with the nine members of OPEC+ reducing their collective output by 1.66 million barrels per day. Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Algeria, and Oman will also reduce their production.
The move has been welcomed by oil producers, who have been struggling with the effects of the pandemic. However, it has been criticized by the White House due to market uncertainty. While the decision has led to a rise in the shares of oil giants such as Shell, BP, and TotalEnergies, experts warn that the rise in oil prices may continue due to increased demand as the global economy recovers. This could put pressure on consumers and result in increased inflation rates.
The prices had previously dropped to $73 and $67 a barrel after the collapse of Silicon Valley Bank in the United States on March 10, which raised concerns of a global recession. With the recent rise in oil prices, inflation may remain high, putting pressure on consumers worldwide. The impact of the decision to cut output by OPEC+ on the oil industry remains to be seen in the coming weeks and months. Many will be watching to see whether the rise in oil prices will continue and whether OPEC+ will decide to make further cuts to production.
