OPEC+ announced its intention to cut oil output by 100,000 bpd in its meeting on Monday.
The organisation confirmed the reduction, which translates to 0.1% of international demand, for October this year, essentially rolling back its earlier adjustment of 100,000 for September.
“The OPEC and Non-OPEC Ministerial Meeting noted the adverse impact of volatility and the decline in liquidity on the current oil market and the need to support the market’s stability and its efficient functioning,” said the cartel in a statement.
“The Meeting noted that higher volatility and increased uncertainties require continuous assessment of market conditions and readiness to make immediate adjustment to production in different forms, if needed, and that OPEC+ has the commitment, the flexibility, and the means within the existing mechanisms of the Declaration of Cooperation to deal with these challenges and provide guidance to the market.”
The minor change still sent oil prices higher, with Brent crude rising 4% to $96 per barrel after the OPEC+ meeting.
Prices have been fluctuating on the back of the Ukraine war and fears of a recession, with continued lockdowns in China fanning production slowdown fears and Chinese city Chengdu going into lockdown last week.
“OPEC+ is wary of protracted price volatility generated by weak macro sentiment, thin liquidity and renewed China lockdowns, as well as uncertainty over a potential U.S.–Iran deal and efforts to create a Russian oil price cap,” said Matthew Holland at Energy Aspects.
The news comes on the heels of Russia’s announcement that it would not supply oil to countries in support of a price cap for the country’s energy supplies due to its invasion of Ukraine.
“An output cut won’t make them any friends at a time when the world is facing a cost-of-living crisis,” said Oanda analyst Craig Erlam.
