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Oil prices shoot up as OPEC+ members mull output cut by 1 million bpd

Oil prices jumped by more than $4 on Monday as the Organization of the Petroleum Exporting Countries and its allies – known collectively as OPEC+ – considered reducing output by more than 1 million barrels per day (bpd) to buttress prices. This would be the biggest cut by OPEC+ since the start of the COVID-19 pandemic. 

Brent crude oil futures were up $4.38 or 5.1 per cent to $89.52 a barrel by 9:50 a m. US West Texas Intermediate crude oil was up by $4.79 or 6 per cent at $84.28. 

Oil prices have tumbled for four straight months since June as COVID-19 lockdowns in top energy consumer China hurt demand, while rising interest rates and a surging US dollar weighed on global financial markets. 

To support prices, the OPEC+ was considering an output cut of more than 1 million bpd ahead of Wednesday’s meeting, OPEC+ sources told the Reuters. 

That figure did not include additional voluntary cuts by individual members, one OPEC source added. 

If agreed, it will be the group’s second consecutive monthly cut after reducing output by 100,000 bpd last month. 

“After a year of tolerating extremely high prices, missed targets and severely tight markets, the (OPEC+) alliance seemingly has no hesitation when it comes to acting rapidly to support prices amid a deterioration in the economic outlook.” 

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