Oil prices surge as Saudi Arabia leads shock production cuts

Oil prices surged in early morning trading after Saudia Arabia and other major oil producers announced a surprise cut in production. Several Gulf states on Sunday said they would decrease production by more than one million barrels per day.

The price of Brent crude oil was trading above $84 a barrel in Asia after jumping by more than $4 or 5 per cent. Analysts said higher oil prices would help fill Russian president Vladimir Putin’s coffers as his country wages war on Ukraine and force Americans and others to pay even more at the pump amid inflation fuelled in part by that conflict.

It was also likely to further strain ties with the United States, which has called on Saudi Arabia and other allies to increase production as it tries to bring prices down and squeeze Russia’s finances.

The cuts are in addition to a reduction announced last October that infuriated the Biden administration.

Saudia Arabia described the move as a "precautionary measure" aimed at stabilising the oil market. The cuts represent less than 5 per cent of the country’s average production of 11.5 million barrels per day in 2022.

Key Points

• Price of brent crude surges

• Gulf states announce cut in production

10:20 , Matt Mathers

We’re wrapping up our live business coverage for today.

Join us again soon for all the latest developments in the markets.

Thanks for reading and enjoy the rest of your morning.

08:26 , Matt Mathers

Good morning and welcome to The Independent’s live business coverages.

We’ll be focusing on oil prices today after the price of oil rose after Saudi Arabia and several other Gulf states announced production cuts.

Stay tuned for all the latest updates.

Oil prices surge as Saudi and other OPEC nations slash production in shock move

08:27 , Matt Mathers

Saudi Arabia and other major oil producers have announced surprise cuts totalling 1.15 million barrels per day from May until the end of the year, a move that could raise prices worldwide.

Higher oil prices would help fill Russian president Vladimir Putin’s coffers as his country wages war on Ukraine and force drivers around the world to pay even more at the pump amid inflation fuelled in part by that conflict.

Namita Singh reports:

Oil prices surge as Saudi and other OPEC nations slash production

Oil prices soar on producer output cuts; Asian shares mixed

08:32 , Matt Mathers

Oil prices soared more than 5 per cent after Saudi Arabia and other major oil producers said they will cut production by 1.15 million barrels per day from May until the end of the year. Shares in Asia were mixed on Monday and the dollar rose against the Japanese yen.

US benchmark crude oil rose $4.14 to $79.81 per barrel, or 5.5 per cent, in electronic trading on the New York Mercantile Exchange. It rose $1.30 to $75.67 per barrel on Friday, ahead of the weekend meeting where members of the so-called OPEC+ group of oil exporting countries decided on the cuts, which are in addition to a reduction announced last October that infuriated the Biden administration.

Full report:

Oil prices soar on producer output cuts; Asian shares mixed

Oil price hike could make inflation battle harder

09:15 , Matt Mathers

Yael Selfin, chief economist at KPMG, has warned that the oil price surge could make the UK’s battle to bring down inflation harder.

Inflation jumped back to 10.4 per cent last month following three consecutive months of decreases.

Ms Selfin, however, said that rising oil prices won’t necessarily lead to higher household energy bills.

“The energy price cap, that households benefit from, has already been determined using earlier market expectations,” she said.

“Plus, when you look at energy use in households, it tends to be more gas-heavy rather than oil.”

Saudi Arabia showing US ‘it’s no longer a unipolar world’

10:10 , Matt Mathers

Saudi Arabia’s move to cut oil production was designed to show the US “it’s no longer a unipolar world”, an analyst has suggested.

“It’s a Saudi-first policy. They’re making new friends, as we saw with China,” Helima Croft, head of commodity strategy at RBC Capital Markets, said.

The kingdom was sending a message to the US that “it’s no longer a unipolar world”, she added.