OPEC+ came to a decision earlier today. The group agreed to continue with its strategy of gradually reopening the taps following the news that the US is considering the largest-ever draw from its emergency oil reserves – 180 million barrels. This move would mark the third time the US tapped its reserves in six months and the second since February 24.
The energy alliance will raise its output target by 432,000 barrels per day starting May 1. The decision was in line with expectations.
OPEC+ is in the process of relaxing the record supply cuts off approx. ten million barrels per day. The cut was put in place in April 2020 to help the energy market recover after the COVID-19 restrictions cratered the demand for crude oil.
So far, oil prices have rallied to near all-time highs because of the concerns about Russian supply disruptions after the US and multiple international allies imposed several economic measures against the Kremlin, following its invasion of Ukraine. Russia is the world’s third-largest oil producer and a major producer and exporter of natural gas.
After the news hit the wires, Brent oil traded 5% lower at $107.69 per barrel, and Crude oil fell 5.4% to $101.96/barrel.
Sources: Bloomberg.com, cnbc.com