By Ambar Warrick
Investing.com– Oil prices rose on Monday, erasing some of last week’s losses, as more OPEC+ members expressed support for a recent production cut of over 2 million barrels a day, despite mounting opposition from the United States .
The Organization of Petroleum Exporting Countries and its allies, including Saudi Arabia, the United Arab Emirates, Iraq and Kuwait, expressed their support for the production cut over the weekend and expressed a shared need to stabilize oil prices amid headwinds from slowing economic growth.
London trade was up 1.1% to $92.47 a barrel, while by 20:46 ET (00:46 GMT) it was up 0.9% to $85.37 a barrel. Both contracts rebounded from a 7% loss last week, spurred by a strengthening and stronger-than-expected rise in the United States.
OPEC+ members reiterated their support for the supply cut amid a growing rift between the United States and Saudi Arabia, the cartel’s leader. The Biden administration has criticized the production cut, saying it will raise oil prices and support Russia’s war effort in Ukraine by giving Moscow higher crude oil revenues.
Washington also accused OPEC leader Saudi Arabia of forcing smaller members to comply with the cut.
Several OPEC+ members denied that the cut had political motives, arguing that it was meant to stabilize crude prices instead. News of the cut had sent oil prices higher earlier this month, with the cartel’s reassurances on stability supporting a bullish outlook for crude prices.
But the US had also responded to the supply cut by releasing 7.7 million barrels of oil from its Strategic Petroleum Reserve (SPR) last week in a bid to slash crude prices.
The US has steadily pulled out of the SPR this year in a bid to achieve a limit at home and reduce oil revenues received from Russia. The Biden administration has now threatened to release more oil in the face of the supply cut, which could cause near-term volatility in crude oil markets.
Near-term demand for crude oil could also come under pressure from further disruptions in China. on Sunday said the country will stick to its zero-COVID policy this year despite widespread damage to the Chinese economy.
But the Chinese president also said Beijing will increase spending and stimulus to prop up economic growth. The slowdown in China’s economic activity has led to a sharp drop in crude oil imports this year.