Crude jumps 2% in London amid risk of renewed market turmoil
Russia plans to cut its oil output by 500,000 barrels a day next month, following through on a threat to retaliate against western energy sanctions and sending oil prices sharply higher.
The move threatens to renew turmoil in the oil market, which had so far taken disruption to Russian supplies in stride. It further tightens supply constraints from OPEC+, which Saudi Arabia had already led into a 2 million barrel-a-day production cut last year in an effort to buoy prices. Delegates from the group signaled they won’t take any action to fill in the gap created by Russia.
Crude prices jumped on the news, with global benchmark Brent trading 2.2% higher at $86.34 a barrel by 12:22 p.m. in London. Prior to this week, the international benchmark had dropped 9% since mid-January, helping to ease inflationary concerns.
Russia’s reduction is equivalent to about 5% of its January output. The Kremlin has repeatedly hinted at such a move since the European Union and the Group of Seven industrialized countries began discussing capping the price of Russian crude and refined product exports amid the war in Ukraine