By Ambar Warrick
Investment.com – Oil prices rose on Monday, recovering some of last week’s losses as many OPEC+ members expressed support for recent production cuts of more than 2 million bpd, despite the increased opposition from the United States.
The Organization of the Petroleum Exporting Countries and its allies, including Saudi Arabia, the United Arab Emirates, Iraq and Kuwait, expressed support for production cuts in over the weekend, expressed the general need to stabilize oil prices in the context of slowing economic growth.
Trading in London was up 1.1% to $92.47 a barrel, while up 0.9% to $85.37 a barrel by 20:46 ET (00:46 GMT). Both contracts recovered from last week’s 7% loss, boosted by a stronger dollar and larger-than-expected inventories in the United States.
OPEC+ members reiterated their support for supply cuts amid a growing rift between the United States and Saudi Arabia, the cartel-led nation. The Biden administration criticized the production cuts, saying it would raise oil prices and aid Russia’s war effort against Ukraine by giving Moscow more revenue from crude.
Washington also accused OPEC leader Saudi Arabia of forcing smaller members to comply with the cuts.
Some OPEC+ members denied that the cuts were politically motivated, arguing that they were instead aimed at stabilizing crude oil prices. News of the cuts sent oil prices soaring earlier this month, with the cartel’s assurances of stability supporting a bullish outlook for crude prices.
However, the US also responded to the supply cuts by releasing 7.7 million barrels of oil from the Strategic Petroleum Reserve (SPR) last week, in an attempt to lower crude prices.
The US has been gradually pulling out of the SPR this year to help fix domestic gasoline prices and reduce the oil revenue Russia receives. The Biden administration has now threatened to release more oil due to supply cuts, which could cause short-term volatility in the crude oil market.
Crude oil demand in the near-term could also come under pressure from more disruptions in China. on Sunday said the country would stick to its COVID-free policy, despite the widespread damage to the Chinese economy this year.
However, the Chinese president also said that Beijing will increase spending and stimulus to help spur economic growth. Slowing economic activity in China has caused the country’s crude oil imports to plummet this year.