OPEC+ reduces production, world crude oil prices 'boil'

Jakarta,- Oil prices rose in Asian trade on Monday after OPEC+ extended production cuts until 2025, although speculation about a ceasefire in Gaza limited the increase.

Based on Refinitiv, the world's benchmark oil prices on Monday (3/6/2024) at 09.45 WIB were compactly strengthened. Brent crude oil rose 0.02% to US$81.64 per barrel. Meanwhile, West Texas Intermediate (WTI) strengthened 0.64% to US$77.48 per barrel.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to extend the current production cuts at a meeting held on Sunday.

The cartel, led by Saudi Arabia and Russia, will keep production at around 5.8 million barrels per day offline until at least early 2025.

Specifically, the cartel will maintain cuts of 3.6 million barrels per day until the end of 2024, while cuts of 2.2 million barrels per day will be phased out between October 2024 and September 2025.

This move was expected by the market, given that OPEC+ production cuts are largely aimed at supporting oil prices through market tightening.

The cartel said it is waiting to see a broader improvement in economic conditions and a decline in interest rates before it starts increasing production.

Israel-Hamas ceasefire comes into focus after new US proposal. US President Joe Biden last week unveiled a three-phase plan for a ceasefire between Israel and Hamas in Gaza.

The plan includes a six-week ceasefire and the withdrawal of Israeli troops from Gaza, while Hamas will release Israeli hostages in exchange for hundreds of Palestinian prisoners. The proposal also opens the door for more aid to Gaza, and calls for renewed negotiations between Israel and Hamas on a permanent ceasefire.

Reports said that Hamas leaders reacted positively to the proposal, while Israel also tentatively agreed to the deal.

The ceasefire in the region is expected to make traders increasingly factor in the geopolitical risk premium of crude oil. Fears of a worsening conflict in the Middle East have been a key driver of crude oil prices in recent months.

Sources : cnbcindonesia.com Jun 03.24

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World Oil Prices Rise Ahead of OPEC+ Meeting