Oil prices surge after surprise move by Opec+ producers to cut output
By BBC, April 4, 2023Oil prices have surged after several of the world’s largest exporters announced surprise cuts in production.
The price of Brent crude oil is trading above $84 a barrel after jumping by almost 6 per cent.
Economists warned that higher oil prices could make it harder to bring down the cost of living.
But the RAC motoring group said it does not expect petrol prices to rise unless the higher oil price is sustained over several days. Brent crude prices rose after Saudi Arabia, Iraq and several Gulf states said on Sunday they were cutting output by more than one million barrels of oil a day.
In addition, Russia said it will extend its cut of half a million barrels per day until the end of the year.
Energy giants BP and Shell saw their share prices rise on Monday, with both rising more than 4 per cent. Oil prices soared when Russia invaded Ukraine, but are now back at levels seen before the conflict began. However, the US has been calling for producers to increase output in order to push energy prices lower. A spokesperson for the US National Security Council said: “We don’t think cuts are advisable at this moment given market uncertainty – and we’ve made that clear.”
High energy and fuel prices have helped to drive up inflation – the rate at which prices rise – putting pressure on many households’ finances.
Yael Selfin, chief economist at KPMG, warned that the oil price surge could make the battle to bring down inflation harder.
However, she said that rising oil prices won’t necessarily lead to higher household energy bills.
“The energy price cap, that households benefit from, has already been determined using earlier market expectations,” she said. “Plus, when you look at energy use in households, it tends to be more gas-heavy rather than oil.” – BBC