OPEC+ supply cuts loom over already tight oil market

OPEC+ supply cuts loom over already tight oil market

LONDON/GENEVA/VIENNA - OPEC+ looks set to cut output when it meets on Wednesday, curbing supply in an oil market that energy company executives and analysts say is under strain from robust demand, lack of investment and production problems.

The potential OPEC+ cut could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago due to fears of a global economic recession, rising U.S. interest rates and a stronger dollar.

OPEC+, which includes Saudi Arabia and Russia, surprised the market by suggesting output cuts in excess of one million barrels per day (bpd), sources from the group have said in what would be the biggest output cut since the pandemic.

Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and allied producers (OPEC+) have said they seek to prevent volatility rather than to target a particular oil price.

On Tuesday, international benchmark Brent crude rose nearly 3% above $91 per barrel.

"Such a decision would be difficult to justify fundamentally, as the oil market suffers anything but a surplus," said Norbert Rucker, Julius Baer's head of economics.

"The petro-nations seem willing to exploit their power to artificially prop up oil prices, increasing the tensions with the