Oil Nears $90/Barrel as OPEC+ Extends Cuts, Market Tightens

Oil prices rise as OPEC+ extends cuts, Brent nears $90 amid tight global supply and rising demand.

By Barry Stearns

4/3, 21:32 EDT
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Key Takeaway

  • OPEC+ maintains supply cuts through June, pushing Brent crude toward $90/barrel and WTI near $86, signaling tighter global markets.
  • Despite compliance issues with Iraq and Russia, OPEC+ aims for stricter adherence to quotas, potentially reducing production further.
  • US crude stockpiles rose unexpectedly last week; however, significant gasoline inventory drops hint at higher future prices for drivers.

Oil Prices Edge Higher

Brent crude is moving toward $90 a barrel, marking a significant uptick as it climbed more than 2% over the previous sessions, while West Texas Intermediate (WTI) hovers near $86. This rise comes after OPEC+ confirmed it would maintain its existing supply cuts through the end of June, aiming to keep the global markets tight. Despite this, compliance issues persist, with Iraq exceeding its quota in March and Russian crude exports on the rise. Daniel Hynes, a senior commodity strategist at ANZ Banking Group Ltd., anticipates a further drop in OPEC production in the coming months, emphasizing the group's commitment to adhering to the agreed-upon cuts.

Market Dynamics and Supply Concerns

The global crude benchmark has seen a 16% increase this year due to tighter supply, disruptions to shipping, and attacks on Russian refineries. Signs of demand revival in Asia and comments from Federal Reserve Chair Jerome Powell about a potential US rate cut have also influenced the market. However, US crude stockpiles rose unexpectedly last week, contrasting with forecasts for a decline, though gasoline holdings saw a significant drop, indicating higher future prices for both futures and American drivers.

Russia's Export Surge

Despite OPEC+ efforts to curb supplies, Russia's seaborne crude exports surged to the highest level this year in the final week of March. This increase comes as Russia moves away from cutting exports to focus on production targets. The surge in shipments has boosted Moscow's oil earnings, with the gross value of crude exports reaching a five-month high. Most of the backlog of Russia’s Sokol crude, previously turned away by Indian refiners, has now been discharged, with a significant portion delivered to China and India.

Street Views

  • Daniel Hynes, ANZ Banking Group Ltd. (Bullish on oil):

    "For the next two or three months, I expect to see OPEC production fall even further."