Oil prices have spiked after the world’s largest exporters under the banner of Organisation of the Petroleum Exporting Countries (OPEC)+ announced surprise cuts in production on Sunday April 2, 2023. The price of Brent crude oil is now trading close to $85 a barrel after jumping by almost 6%.
The surge comes as economists warn that higher oil prices could make it harder to bring down the cost of living.
Brent crude prices rose after Saudi Arabia, Iraq and several Gulf states said on Sunday that they were cutting output by more than one million barrels of oil a day. Russia, currently under heavy sanctions also announced it will extend its cut of half a million barrels per day until the end of 2023.
Energy giants BP and Shell saw their share prices rise on Monday, with both rising more than 4%.
Oil prices had initially spiked when Russia invaded Ukraine in February 2022 but is now back at the pre-invasion levels.
The reduction in output is being made by members of the OPEC+ oil producers who account for about 40% of all the world’s crude oil output.
Saudi Arabia is reducing output by 500,000 barrels per day and Iraq by 211,000. The UAE, Kuwait, Algeria and Oman are also making cuts.