Saudi Arabia and Russia, the leaders of OPEC +, said that demand for oil has slowed for several months.
Oil prices rose about 3 percent on Monday, as OPEC+ members agreed to a slight production cut of 100,000 barrels per day to support prices.
Brent crude futures for November delivery settled at a rise of $2.72 at $95.74 a barrel, an increase of 2.92 percent.
Prices had jumped by about $4 earlier in the session, but were tamed by comments from the White House that US President Joe Biden is committed to taking all necessary steps to shore up energy supplies and lower prices.
And US crude rose two dollars to 88.85 dollars a barrel, up 2.3 percent after a 0.3 percent increase in the previous session, in minuscule volumes during the Labor Day holiday in the United States.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, the group known as OPEC+, cut 100,000 barrels per day, representing just 0.1 percent of global demand. The group also agreed that they could meet at any time to adjust production before the next meeting scheduled for October 5.
“It is a symbolic message that the group wants to send to the markets more than anything else,” said Craig Erlam, an analyst at OANDA, adding that the OPEC+ increase of 100,000 barrels per day last month was not seen as a big deal.
“What we probably saw from the markets was pricing in most of the worst-case scenarios,” Erlam added.
Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries, last month signaled the possibility of cutting production to address what it sees as exaggerated declines in oil prices.
Russian Deputy Prime Minister Alexander Novak said that expectations of weak global economic growth are behind the decision of Moscow and its OPEC allies to cut oil production.
Russian Energy Minister Nikolai Shulginov said that his country will likely reduce its oil production by about 2 percent this year, TASS news agency reported.
“The bigger picture is that OPEC+ is producing well below its production target, and this seems unlikely to change given that Angola and Nigeria, in particular, appear unable to return to levels of before the epidemic. Economy said.
Oil prices have retreated in the past three months from multi-year highs in March, weighed by concerns that higher interest rates and COVID-19 restrictions in parts of China could slow global economic growth and affect oil demand.
Lockdown measures eased in Shenzhen, the technology hub of southern China, on Monday as new infections showed signs of stabilizing, although the city remains on a high alert.
Meanwhile, talks on reviving the 2015 nuclear deal between the West and Iran faced a new obstacle, which is likely to provide a supply boost from the return of Iranian crude to the market. A Western diplomat said the White House on Friday rejected Iran’s call for a deal linking it to the closure of investigations by the United Nations’ International Atomic Energy Agency.
The Iranian Minister of Petroleum said that the global energy market needs to increase the supply of oil from Iran.
Analysts said the use of oil in power generation was also expected to rise, with Russia’s state-controlled Gazprom saying on Friday it would stop pumping gas through the Nord Stream 1 pipeline due to a fault.
The International Energy Agency last month raised its forecast for oil demand for the year, in part because it expects to switch from gas to oil in some countries due to record natural gas and electricity prices.