New York oil prices soared as OPEC+ (Oil Exporting Countries Organization and major oil producing countries such as Russia) froze production in April, unlike expected.
On the 4th, on the New York Commercial Exchange, the price of West Texas crude oil (WTI) in April ended at $63.83, soaring 2.55 (4.2%) per barrel. WTI has risen to its highest level in about two years since April 2019.
Crude oil market participants were keenly aware of the results of the OPEC+ meeting.
OPEC+ agreed to almost freeze oil production in April at a ministerial meeting held that day.
In Russia and Kazakhstan, production was allowed to increase by 130,000 and 20,000 barrels per day, respectively. The measure takes into account the specificity of seasonal demand, explained OPEC+.
The remaining oil producing countries maintain the same oil production as in March.
In addition, Saudi Arabia decided to continue the voluntary reduction of 1 million barrels per day, which was originally promised until March, into April.
The Saudi Oil Minister also said, “It will gradually reduce” the voluntary reduction of 1 million barrels, and expressed the intention that it will not increase production rapidly in the future.
This is a result that differs greatly from the general outlook of the market, which oil-producing countries expected to increase production.
In the market, the dominant outlook was that OPEC+ would increase production by an average of 500,000 barrels per day from April, and that Saudi Arabia would withdraw voluntarily from production cuts.
Until the morning of this day, some foreign media reported that increase production was influential.
However, as oil-producing countries unexpectedly released a card to freeze production, major international oil prices such as WTI and Brent oil surged 5% compared to the battlefield at one time during the week.
Unrest in the financial market as a result of the surge in US Treasury yields controlled the top of oil prices.
Jerome Powell, chairman of the Federal Reserve System (Fed), raised the US 10-year Treasury bond yield to the mid-1.5% in an interview on the day without suggesting the possibility of a policy response to rising interest rates.
Chairman Powell said the recent rise in interest rates has attracted attention, but he did not give any hints on what the market expected, such as an operation twist.
Accordingly, the overall financial market is unstable, with major indexes of the New York Stock Market falling sharply.
Crude oil market experts assessed that although OPEC+’s supply restrictions could cause oil prices to rise, it could trigger production increase in other oil producing countries.
Alisa Kokoran, director of Copernik Global Investor, said, “I don’t know if OPEC+ made the right decision as short-term demand for crude oil is very difficult to predict.” said.
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