Saudi Arabia, the United Arab Emirates and Kuwait have announced that they will together reduce oil production by as much as 772,000 barrels per day. They hope the cuts will stabilize the market. It came as a surprise, according to oil analyst at SEB, Bjarne Schieldrop. – There were no indications in advance that this was going to happen. On the contrary, Saudi Arabia had announced that they would keep production stable, says Schieldrop to news on Monday. The price of oil rose by almost 6 percent on the Asian stock exchanges on Monday morning after warnings of more cuts in oil production. Photo: Eugene Hoshiko / AP Will probably continue to rise The announced cuts led to a barrel of North Sea oil rising in price by almost 6 percent on the Asian stock exchanges on Monday morning. A barrel now costs 84.42 US dollars. In total, the price of oil has risen 8 per cent in the last five days. The Economic Times writes that oil prices will probably rise to 95 dollars per barrel in December. Schieldrop believes the oil price will rise to over 100 dollars. For several of the most important exchanges, there was also an increase early on Monday. The Nikkei 225 index rose by 0.55 percent. So did the Shanghai Composite. From the opening at nine o’clock, the Main Index Oslo Børs also increases. At 09:07 it had risen by 1.5 per cent. Rising oil prices can be good for the economy, but can also lead to inflation and interest rate hikes. It can still be good news for the Norwegian economy, Schieldrop believes. The Norwegian krone is closely linked to the international oil price. Photo: news Stronger krone exchange rate The Norwegian krone, which is closely linked to the price of oil, has been weak for a long time. Last summer, the price of North Sea oil reached almost 130 dollars a barrel. In March, the price was just over 80 dollars a barrel. On Sunday evening, the krone strengthened by 0.4 per cent against the US dollar. – A higher oil price is good news for the Norwegian economy. It is natural that the Norwegian krone strengthens due to the rising prices. Whether the krone will rise further remains to be seen. Last night, Bloomberg wrote that the Norwegian krone is leading among several commodity-heavy currencies. May lead to price growth The three golf countries are all members of the trade organization Opec+. After they announced reduced production, among others Russia, which is also a member state, did the same. They will continue cuts of 500,000 barrels per day until 2023. Algeria, Kuwait and Oman will also reduce production by a total of 216,000 barrels of oil per day. Iraq reduces production by 211,000 barrels. In total, the cuts amount to approximately 1.6 million barrels per day from May until the end of the year. These are the biggest reductions in oil production since Opec+ cut 2 million barrels per day in October last year. The decision to reduce production may lead to further price increases in several countries. It may also force central banks to raise interest rates even more, according to analyst Matt Simpson, who speaks to Reuters. Oil analyst Schieldrop says he is not worried about global inflation. – Here it is important to remember that the average price of a barrel of oil in 2022 was 99 dollars. Russia profits well from the cuts Schieldrop points out that declining production of oil will lead to a tighter oil market. Russia benefits from that, he says. – Russia is now securing a higher oil price to finance the war in Ukraine. This goes directly against the sanctions that the USA and Europe have against the country. When asked what the West can do to prevent Russia from earning more from its own oil production, Schieldrop replies that it is difficult. – In that case, there must be even stronger sanctions, but it is difficult for the West to force the price of oil down. Saudi Arabia and Opec+ have good control over the global oil market, Schieldrop believes. Even after the latest production cut, they have the opportunity to cut more. – This also shows that Saudi Arabia leans more towards Russia than they do towards the USA. There are strong political issues underlying this.
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Oil prices rise sharply on Asian stock exchanges – news Norway – Overview of news from various parts of the country
