Oil prices spike 6% after OPEC’s unexpected supply cut

Oil prices spike 6% after OPEC’s unexpected supply cut

On Sunday, OPEC+ announced an unexpected supply cut of more than 1 million barrels a day.

Oil prices surged Monday, with Brent crude hovering near $85 a barrel.

The production cuts were spread among OPEC members. Saudia Arabia led the way with a 500,000 barrel cut.

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Oil prices surged 6% Monday following OPEC+'s announcement that it would slash production by more than 1 million barrels per day.

Prices soared as much as 8% before paring the biggest gains. Brent crude, the international oil benchmark, was trading just under $85 a barrel Monday morning, up from $76 a barrel a week ago.

The group stated the move was precautionary and meant to ensure market stability. The reductions were spread out across member nations, with Saudi Arabia leading the way with a 500,000 barrel-a-day cut.

Energy Aspects analyst Livia Gallarati told Insider that the firm already anticipated oil spiking in 2023 before the production cuts, given higher demand amid China's reopening. But with OPEC+'s latest initiative, she said the market will become more constrained.

"Now we have these OPEC+ production cuts, which will definitely tighten the