OPEC+ backing for a production cut raises oil prices

Oil prices increased on Monday, recouping some of the previous week's losses, as more OPEC+ members declared support for a recent production cut of more than 2 million barrels per day, despite the United States' growing hostility.

Several members of the Organization of the Petroleum Exporting Countries and its allies, including Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait, expressed support for the output cut over the weekend, emphasizing the need to stabilize oil prices in the face of slowing economic development.

Brent oil futures traded in London rose 1.1% to $92.47 per barrel at 20:46 ET, while U.S. West Texas Intermediate futures rose 0.8% to $85.37 per barrel (00:46 GMT). Due to a rising dollar and a larger-than-anticipated increase in U.S. inventories, both futures recouped the 7 percent losses from the previous week.

OPEC+ countries maintained their support for the output cut notwithstanding a developing divide between the United States and Saudi Arabia, the cartel's leader. The Biden administration criticized the fall in output, stating that it will increase oil prices and strengthen Russia's military campaign against Ukraine by boosting its petroleum income.

Washington has accused Saudi Arabia, the OPEC's leader, of pushing weaker members to adhere to the cut.

Several OPEC+ members denied that the cut was politically driven, arguing that the goal was to stabilize crude oil prices. The announcement of the cut sent oil prices soaring earlier this month, with cartel assurances of stability boosting an optimistic crude price outlook.

In an effort to reduce crude oil prices, the United States released 7.7 million barrels of oil from its Strategic Petroleum Reserve (SPR) last week in response to the supply drop.

This year, the United States has gradually withdrawn from the SPR in an effort to limit domestic gasoline prices and lower Russia's oil income. In reaction to the supply cut, the Biden administration has pledged to release additional oil, which may cause petroleum prices to fluctuate in the near future.

In the near term, the demand for crude could be hampered by additional disruptions in China. President Xi Jinping announced on Sunday that China will continue to its zero-COVID policy this year despite severe economic losses.

However, the Chinese president also stated that Beijing will raise expenditures and stimulative measures to support economic growth. This year, China's imports of oil dropped due to the country's weak economic growth.