OPEC+ Cuts Oil Production

Today, Bloomberg reported that OPEC+, including Russia, pledged to reduce its production by more than 1 million barrels a day starting next month and lasting through the end of the year. The reduction surprised the energy markets, which had expected the cartel to hold output steady. Adding to the shock, the decision came outside of the group’s scheduled timetable for reviewing the market’s demand and member’s supplies.

We view the cartel’s decision as a defensive move to avert a further slide in the price of oil rather than to push it back up aggressively. The nearby price of a barrel of Brent crude oil jumped over $110 per barrel early last year when Russia invaded Ukraine (chart).