Oil prices edged up on Monday on reports that major oil-producing nations could deepen existing cuts to supply.
The Organization of the Petroleum Exporting Countries (OPEC) is poised to discuss cuts over and above daily reductions already in place when it meets on Sunday, November 26, according to Reuters sources.
News of the potential squeeze to supply saw prices of Brent Crude and West Texas Intermediate jump on Monday, having steadily fallen since peaking in September.
WTI climbed by 2% to US$77.15, while Brent increased 1.6% to US$81.63 per barrel.
According to sources, the cuts could amount to an extra 1 million barrels a day, taking the total further above the roughly 5 million barrel global daily reduction currently in place.
Volatility and the ongoing conflict in Israel were cited by sources as reasons for the potential extra cuts, though an attempt to buoy prices pre-emptively to any drop in demand next year would likely take precedence, they said.
Analysts explained that the effects of further cuts were still unknown, with Swissquote commenting: “It’s a risky move and [that] could go both ways.”
“Oil prices are trending lower today because of a weakening global outlook,” the bank explained
“Therefore, whether this move […] attracts buyers or exacerbates the current global economic concerns remains to be seen.”