Oil Plummets as OPEC Reportedly Considering an Output Increase

Oil Pump rig
Image by maxsafaniuk.gmail.com/Depositphotos

Oil continued to decline on Monday amid reports that Saudi Arabia and other OPEC members are considering an increase in output as China’s tightening anti-Covid restrictions threaten supply. Global benchmark Brent declined by approximately 6% to $83; its lowest price since January.

As the European Union seeks to impose an oil embargo on Russian oil, OPEC+ nations are reportedly considering a production increase of 500,000 barrels per day.

China made the decision to tighten its Covid-related health restrictions again after the country experienced its first Covid-related deaths in six months. This news sparked fears of a new wave of the virus.

Oil has lost all of its gains made since the start of the current quarter. The commodity started the quarter strong as OPEC+ members and their allies including Russia made the decision to decrease production by approximately two million barrels per day.

Following the latest decline in oil prices, Goldman Sachs has reduced its own fourth-quarter forecast for Brent crude by $10 to $100 per barrel. It is believed that this forecast could be slashed further should China’s anti-virus measures be tightened further.