OPEC+ Nations Cut Oil Production by 2.2M Barrels per day

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Oil prices rose on Monday after OPEC+ members agreed to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter, which was broadly in line with market expectations. Brent futures were 28 cents, or 0.3 percent, higher at $83.83 a barrel at 0134 GMT, while US West Texas Intermediate (WTI) rose 20 cents, or 0.3 percent, to $80.17 a barrel.

The Organisation of Petroleum Exporting Countries and its allies' (OPEC+) output cuts are expected to cushion the market amid global economic concerns and rising output outside the group, with Russia's announcement surprising some analysts. Russia will reduce its oil output and exports by 471,000 barrels per day (bpd) in the second quarter, in coordination with some OPEC+ members, Deputy Prime Minister Alexander Novak announced on Sunday.

"Signs of tightness in the physical market continue to drive crude oil up. "The OPEC+ alliance's output cuts continue to reduce supply as the market worries about renewed tensions in the Middle East," ANZ analysts said in a note on Monday.

Rising geopolitical tensions due to the Israel-Hamas conflict and Houthi attacks on Red Sea shipping have supported oil prices in 2024, although concern about economic growth has weighed. Yemen's Iran-backed Houthis vowed on Sunday to continue targeting British ships in the Gulf of Aden following the sinking of UK-owned vessel Rubymar.

U.S. Vice President Kamala Harris demanded an immediate six-week ceasefire from Palestinian militant group Hamas on Sunday, while also strongly urging Israel to do more to increase aid deliveries to Gaza. Washington has insisted that a cease-fire agreement is close and has been pushing for a truce to be in place by the start of Ramadan, which is just one week away. On Saturday, a US official announced that Israel had reached an agreement on a framework deal.