OPEC+ sends oil prices soaring. Here's the rundown on what just happened.
The Organization of the Petroleum Exporting Countries and its allies said they decided Sunday to cut production in an effort to support oil-market stability, but that offers little comfort to consumers worried about inflation and an expected spike in fuel demand during the coming summer driving season.
“The nature and timing of the decision are shocking, since prices have been only moderate pressured from the banking mini-crisis and the market is expected to tighten later this year,” said Michael Lynch, president of Strategic Energy & Economic Research. The OPEC+ Joint Ministerial Monitoring Committee, however, did hold a meeting on Monday, as it does every two months. The committee has no ability to make decisions on production, but has the authority to request an OPEC and non-OPEC ministerial meeting at any time to address market developments.
The cuts, however, are in addition to the previous OPEC+ production cuts of 2 million barrels a day, as well as the extension of Russia’s reduction of 500,000 barrels a day in retaliation to western oil-price caps and sanctions. That brings the total output reductions to 3.657 million barrels a day. On March 23, Granholm said that it may take years for the U.S. to refill its Strategic Petroleum Reserve. She appeared to walk back those comments on March 28, with Reuters reporting that she said the U.S. could start buying back crude oil for the SPR late this year.
On Monday, the front-month May WTI oil futures contract CLK23 CL.1 climbed 6.4% to trade above $80.50 a barrel ahead of the closing bell on the New York Mercantile Exchange. Global benchmark June Brent oil BRNM23 BRN00 rose $4.75, or 6.3%, to close at $80.42 a barrel on ICE Futures Europe. The energy market saw broad gains, with company shares and exchange-traded funds, including the Energy Select Sector SPDR Fund XLE , rallying in the wake of the OPEC+ news.
Total U.S. petroleum production stood at 12.2 million barrels a day as of the week ended March 24, down 100,000 barrels per day from a week earlier, according to data from the Energy Information Administration.
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