Oil jumps over $2 before Opec+ summit

On Monday, oil prices increased by more than $2 per barrel as investors anticipated possible moves by Opec+ producers to reduce output and support prices at a meeting later in the day.

Brent crude futures rose $2.43, or 2.6%, to $95.45 a barrel by 08:50 GMT on Monday, following a 0.7% increase on Friday. The price of U.S. West, Texas Intermediate crude, rose $2.21, or 2.5%, to $89.08 after gaining 0.3% in the prior session.

On Monday, US markets are closed for a national holiday.

The Organization of Petroleum Exporting Countries (Opec) and its allies, a group known as Opec+, will discuss oil output cuts of 100,000 barrels per day and other options later on Monday, according to sources from the group quoted by Reuters.

“The group is expected to leave output targets unchanged, but, likely, a cut will at least be discussed,” said Craig Erlam, senior market analyst at Oanda. “A cut, if implemented, would create more volatility and uncertainty at a time of considerable unease.”

The Wall Street Journal reported on Sunday, citing anonymous sources, that Russia, the world’s second-largest oil producer, and a key Opec+ member, does not support a production cut. The producer group is likely to vote to maintain output.

In the three months since reaching multi-year highs in March, oil prices have declined due to concerns that interest rate hikes and Covid-19 restrictions in parts of China will slow global economic development and reduce oil demand.

Monday saw the easing of lockdown measures in Shenzhen, China’s southern technological powerhouse, as new illnesses showed signs of stabilizing. But, at the same time, the city remained on high alert.

In the meantime, discussions to restore the 2015 nuclear agreement between the West and Iran have hit a new hitch, threatening the possible supply boost resulting from Iranian petroleum returning to the market.

On Friday, a Western official reported that the White House rejected Iran’s demand that an agreement is contingent on the conclusion of probes by the U.N. nuclear watchdog.