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06 December 2023

Oil soars 12% from 12-year low on renewed talk of Opec cut

By Vicky Kapur

Global oil prices saw their biggest gains in seven years on Friday, the final trading day of the week as market players come to believe that Opec may be finally opening to a production-cut deal soon.

The renewed impetus in a market marred with glut saw prices surging by double-digits on Friday. US crude (WTI) jumped 12.32 per cent to close the week at $29.44 per barrel while Brent oil prices surged 10.98 per cent to close at $33.36 a barrel.

WTI hit a 12-year low of $26.05 on Thursday while Brent had slid under $30 on the same day.

According to Wall Street Journal, the UAE’s energy minister has said that the Organisation of the Petroleum Exporting Countries (Opec) was willing to cooperate on an output cut.

A week before that, the Venezuelan oil ministry had signalled Opec members’ willingness to meet in order to discuss the “equilibrium” price of a barrel of oil.

Nevertheless, several analysts and research firms now see oil at $50 a distinct possibility in months to come.

“We expect declining US oil production, in particular, to drive the oil price back up to $50 per barrel by the end of the year,” Frankfurt-based Commerzbank said in a note.

Kuwait Petroleum International (KPI) on Saturday said oil prices could reach a range of $50 to $60 a barrel by mid-2017.