July 16, 2024

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Oil price falls after Saudi-led cartel surprises market

2 min read

Cuts to oil production by Opec nations would likely lead to higher petrol price – Joe Giddens/PA Wire

The price of crude oil fell after a cartel of oil-producing nations led by Saudi Arabia surprised the market by issuing a statement that failed to include an expected pledge to cut production by another million barrels per day.

Brent crude, which is used to price the sale of two-thirds of the world’s oil, had climbed by 5.1pc over the last three days to more than $84 (£66) a barrel in the run up to Thursday’s meeting of the Opec+ group of 23 oil-exporting countries.

The online gathering of producers aimed to prop up the declining price of oil and has ended with an agreement to cut output by at least another one million barrels per day by early next year.

Saudi Arabia, the de facto leader of the group, has already been cutting supply by a million barrels a day since the summer and will extend the time period of these cuts as well.

But Brent Oil fell after the Opec+ meeting issued a statement that avoided a united commitment to cuts in production. The price is down 2.47pc on yesterday.

Oil prices had fallen 8pc this month before its recent rally amid concerns about global demand next year and as the Israel-Hamas war failed to impact supplies.

The meeting had originally been scheduled for Sunday but was delayed after disagreements from some of the alliance’s smaller nations over their contributions to the cuts.

The Opec+ group pumps more than 40pc of the world’s oil, meaning cuts to supply potentially have huge implications for petrol prices.

In related news, Opec+ announced that major oil producer Brazil will join the group from January. UBS analyst Giovanni Staunovo said: “Considering that Brazil is a large oil producer and is driving oil production growth it is important to have them on board, but it seems that they are not cutting production like Mexico.”

Read the latest updates below.

06:17 PM GMT

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2023-11-30 13:17:57

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