Following a day-long decline to nine-month lows, oil prices increased on Tuesday, indicating that the producer group OPEC+ may reduce output to prevent future price declines.
By 0502 GMT, the price of Brent oil futures for November settlement increased by 65 cents, or 0.77%, to $84.71 per barrel. West Texas Intermediate (WTI) crude for November delivery was trading at $77.35 a barrel, up 64 cents. Under the dual pressure of a strengthening dollar, which makes crude priced in greenbacks more expensive for buyers using other currencies, and mounting worries that rising interest rates will lead to a recession that will reduce fuel demand, Brent fell 7.1%. WTI fell 8.1% in the previous two trading sessions.
The oil market received some comfort on Tuesday as the dollar began to weaken. The dollar index was somewhat lower than the 20-year peak reached the day before. Furthermore, officials from significant producers responded to the recent drops by saying they might take steps to maintain price stability.
Will Oil Prices Rise Again?
Iraqi Oil Minister Ihsan Abdul Jabbar said on Monday that OPEC and its OPEC+ partners, including Russia, are closely monitoring oil prices to maintain market stability. In an interview broadcast on Iraqi state television, he stated that they don’t want a significant spike or collapse in oil prices.
OPEC+ may move to raise prices by collectively cutting supply if oil markets continue to fall, according to analysts. Analysts at ING Economics explained that any cuts would need to be well above the 100,000 BPD to weigh on the market.
Following unprecedented production cutbacks implemented in 2020 due to the devastation of demand brought on by the COVID-19 pandemic, OPEC+ increased output this year. However, the effectiveness of any declared output cutbacks is compromised because the organization has recently fallen short of its expected output increases.
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