Oil Prices Increase Before a Possible OPEC+ Supply Cut

As investors expected the conclusion of an OPEC meeting set for later in the day, oil prices climbed on Monday, recouping some of the ground lost during the previous week.

London Brent oil futures increased 1.4% to $94.59 per barrel at 20:08 ET, while U.S. West Texas Intermediate futures increased 1.5% to $88.81 per barrel (00:08 ET).

In the prior week, crude oil prices plummeted between $6 and $8 due to rising concerns about a global economic slowdown, which severely reduced petroleum consumption forecasts. As the Federal Reserve initiates a cycle of monetary tightening, traders anticipate a protracted economic downturn in the United States.

The likelihood of a supply surplus impacted on crude oil prices following reports that the United States and Iran are close to restarting their nuclear agreement. Given that the United States is battling growing inflation due to high gasoline costs, Washington indicated on Friday that it was keen to achieve a deal with Tehran.

Now, attention turns to the Organization of Petroleum Exporting Countries and its allies (OPEC+), who will meet later today to decide whether or not to restrict supplies. Despite the fact that a number of cartel members were exceeding their daily output restrictions, the cartel had already signaled that it would limit production to maintain prices.

However, indicators suggest that the cartel will either maintain production levels or implement a minor reduction in supplies. Despite concerns about a fall in petroleum consumption, supply circumstances appear to be tight, especially in light of Russia's plan to reduce oil exports.

In addition, Moscow cut off gas supplies to Europe, a move that could exacerbate a developing energy crisis in the euro zone and increase oil demand.

A larger-than-anticipated fall in U.S. oil inventories last week indicated that gasoline consumption in the world's largest economy was starting up after a prolonged lull.

Concerns over China's economic slowdown, the world's largest importer of petroleum, impacted oil consumption predictions. COVID- This year, 19 lockdowns and a current energy shortage in China have interrupted corporate operations.