- Oil surges after a surprise announcement by OPEC+ to cut more production
- May ’23 WTI gained $4.36 this morning to trade around $80/Bbl
- OPEC+ made a surprise cut of 1.66 MMBbl/d on Sunday, which raised the overall cut to 3.66 MMBbl/d (Including October's 2 MMBbl/d cut)
- WTI and Brent soared nearly 8% following the announcement before falling back slightly
- Iraq and the semi-autonomous Kurdistan region reached an agreement to resume oil exports through Turkey
- Additionally, the U.S. Dollar remains low relative to its recent highs, making oil more affordable for holders of other currencies
- OPEC+ surprises with more production cuts (BBG, WSJ)
- On Sunday, nine OPEC+ members announced a surprise voluntary cut in production of 1.66 MMBbl/d set to begin in May and last until the end of 2023
- The Saudi Arabian Ministry of Energy said that “this is a precautionary measure aimed at supporting the stability of the oil market”
- Saudi Arabia and Russia will take the lead with reductions of 0.5 MMBbl/d each, followed by Iraq, the UAE, Kuwait, and Algeria. Outside of OPEC, Kazakhstan, and Oman agreed to lower output
- AEGIS notes that the reduction in production could cause long-term price increases in a delicately balanced oil market. This could result in inflation and create a dilemma for Central banks, which are trying to control inflation while supporting the banking crisis
- Iraq and Kurdistan agree to resume oil exports via Turkey this week (BBG)
- Iraq's Kurdistan Regional Government (KRG) and the federal government have agreed to resume oil exports through Turkey this week, with an initial amount of over 0.4 MMBbl/d
- The agreement will remain valid until the Iraqi parliament approves an oil and gas law
- The Northern Iraq-Turkey pipeline was closed in March following an international court ruling that KRG lacked the approval to export oil from the Mediterranean terminal