Global oil prices surge after Gulf countries announce production cuts

London: After Saudi Arabia, Iraq, and several Gulf states informed them of cutting their production, oil prices surged globally.

The Brent crude oil price is trading above $84 a barrel in Asia, an increase of $4 (a 5 per cent increase) after the announcement by Gulf countries, IANS reported, citing BBC.

It was on Sunday the oil-producing countries made the announcement that they are cutting their output by more than one million barrels a day.

When Russia initiated its invasion of Ukraine in February 2022, oil prices soared high, but it has come down to levels before the invasion. The US has called the producers to increase output to bring energy prices down.

Last year's high energy prices had hiked inflation bringing many households under vulnerable.

BBC reported that OPEC+ oil producers, who contribute to about 40 per cent of global crude oil output, were those who announced the oil cut.

Saudi Arabia is reducing output by 500,000 barrels per day and Iraq by 211,000. The UAE, Kuwait, Algeria and Oman are also making cuts.

The Saudi Press Agency cited a Saudi energy ministry official that the move was a precautionary measure to support the stability of the oil market.

However, independent oil analyst Nathan Piper opined that the move by OPEC+ was an attempt to keep the oil price above $80 a barrel in the medium term, given a weakening global economy and sanctions could hit that demand had had a "limited impact" on restricting Russian oil supplies.