An announcement was made that OPEC+, decided to cut production targets by about 100,000 barrels per day from October. The market was caught by surprise as many oil experts expected the group to stay the course with its production policy.
In terms of market moves, oil prices traded sharply higher today with Brent Crude oil trading higher by over 3 percent and West Texas Intermediate trading higher by 3 percent also.
This is another bad scenario for Europe as they face a natural gas crisis this winter after the Nord Stream 1 pipeline was shut-off. WTI at $90.00 and Brent at $96.00 is bad news for Europe.
OPEC+ said in a statement today that the decision to revert back to August levels of production was because the upward adjustment was “intended only for the month of September.”
It should be noted that just last month, OPEC+ had raised oil output by just 100,000 barrels per day. This is therefore the second consecutive monthly output cut of 100,000 barrels.
Joe Biden after had visited Saudi Arabia in the summer to ask the OPEC kingpin to pump more to cool prices and help the global economy. The next OPEC+ meeting is scheduled for Oct. 5.
Elsewhere, European markets fell sharply on Monday as investors continues to weigh economic risks in the region, reignited by concerns about energy supply from Russia.
Most of the concerns in energy are surrounding Germany. A recent energy relief package from the German government has failed to stop losses in German stocks.
The euro currency has also been lingering around the worst levels of the year so far. Despite numerous attempts, sellers have failed to crack the benchmark 0.9900 level.