Oil prices have surged after several of the world's largest oil exporters announced surprise cuts in production. The price of Brent crude oil was trading above USD 84 a barrel in Asia after jumping by more than USD 4, or 5 percent, the BBC reported. The increase came after Saudi Arabia, Iraq and several Gulf states said on Sunday they were cutting output by more than one million barrels a day. Oil prices soared when Russia invaded Ukraine in February 2022, but are now back at levels seen before the war began.
However, the US has been calling for producers to increase output in order to push energy prices lower. High energy and fuel prices last year helped to drive up inflation - the rate at which prices rise - putting pressure on many households' finances.
The reduction in output is being made by members of the OPEC+ oil producers. The group accounts for about 40 percent of all the world's crude oil output, the BBC reported. Saudi Arabia is reducing output by 5 lakh barrels per day and Iraq by 211,000. The UAE, Kuwait, Algeria and Oman are also making cuts. A Saudi energy ministry official said the move was "a precautionary measure aimed at supporting the stability of the oil market", Saudi Press Agency said.
The reductions are on top of those announced by OPEC+ in October, according to SPA. Oil producers agreed to cut output by 2 million barrels a day, the largest cut since the start of the pandemic and equivalent to about 2% of global oil demand.
Meanwhile, Iraq will slash production by 211,000 barrels per day, and the United Arab Emirates will decrease output by 144,000 barrels per day.
Oil prices climb after OPEC producers announce surprise cuts