By Ambar Warrick
Investing.com-- Oil prices rose on Monday, recovering some of last week’s losses as more OPEC+ members expressed support for a recent production cut of over 2 million barrels per day, despite increased opposition from the United States.
Several members of the Organization of Petroleum Exporting Countries and its allies, including Saudi Arabia, the United Arab Emirates, Iraq, and Kuwait expressed support for the production cut over the weekend, expressing a joint need to stabilize oil prices amid headwinds from slowing economic growth.
London traded Brent oil futures rose 1.1% to $92.47 a barrel, while U.S. West Texas Intermediate futures rose 0.9% to $85.37 a barrel by 20:46 ET (00:46 GMT). Both contracts recovered from a 7% loss last week, which was spurred by a strengthening dollar and a bigger-than-expected inventory increase in the United States.
OPEC+ members reiterated their support for the supply cut amid a growing rift between the United States and Saudi Arabia, the leader of the cartel. The Biden administration criticized the production cut, stating that it will increase oil prices and support Russia’s war effort against Ukraine by giving Moscow higher crude revenues.
Washington also accused OPEC leader Saudi Arabia of coercing smaller members into complying with the cut.
Several OPEC+ members denied that the cut had political motivations, arguing that it was instead to stabilize crude prices. News of the cut had sent oil prices soaring earlier this month, with assurances of stability by the cartel supporting a bullish outlook for crude prices.
But the U.S. had also responded to the supply cut by releasing 7.7 million barrels of oil from its Strategic Petroleum Reserve (SPR) last week, in order to bring down crude prices.
The U.S. has steadily drawn from the SPR this year to help cap gasoline prices at home and to lower the amount of oil revenue received by Russia. The Biden administration has now threatened to release more oil in light of the supply cut, which could cause near-term volatility in crude markets.
Near-term demand for crude may also come under pressure from more disruptions in China. President Xi Jinping on Sunday said the country will stick to its zero-COVID policy, despite widespread damage to the Chinese economy this year.
But the Chinese president also said that Beijing will ramp up spending and stimulus to help shore up economic growth. Slowing economic activity in China saw its crude imports drop drastically this year.