Oil prices jump as OPEC continues monthly crude supply hikes
LONDON (Bloomberg) - OPEC+ agreed to maintain its schedule of gradual monthly oil-production increases, sending crude prices higher.
Ministers ratified the 400,000 barrel-a-day supply hike scheduled for November in a video conference on Monday, delegates said. Going into the talks, there had been speculation that the group could opt for a larger supply increase in November, but no such proposal was made, they said, asking not to be named because the meeting was private.
West Texas Intermediate crude jumped as much as 2.4% to $77.68 a barrel in New York, the highest in almost seven years.
The agreement comes as OPEC+ appears to be very much in control of the oil market. Crude is trading at multiyear highs without prompting a surge in rival supplies. The cartel’s production policy will be the main factor influencing prices in the coming months, according to oil trader Vitol Group.
Saudi Arabia is sitting pretty, with output close to pre-pandemic levels, the highest petroleum revenues since 2018 and its fellow members largely united behind the plan to gradually revive idle production each month. Washington is also satisfied with that pace of supply hikes, according to a U.S. official who asked not to be named.
If there is a threat to the delicate balance Organization of Petroleum Exporting Countries and its allies have achieved, it’s the possibility of spillover from external crises. The shortage of natural gas, which has sent prices of the fuel to the equivalent of $190 a barrel, is spurring a switch to oil products for heating and manufacturing, boosting overall demand.
U.S. oil production is still recovering from Hurricane Ida, which has knocked out a total of almost 35 million barrels after slamming the Gulf of Mexico a month ago -- equivalent to almost two full months of OPEC+ supply increases.
Anxiety among key consuming nations is palpable, with rising prices from energy to food and metals threatening to cause an inflationary surge that complicates current monetary policy.
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