Brent crude surges as OPEC+ agrees to cut supply to prop up oil prices

Crude prices surged on Monday following the announcement. Photo: Getty

Brent crude (BZ=F) surged on Monday as the Organisation of Petroleum Exporting Countries and its allies (OPEC+) agreed a token supply cut to lift oil prices.

The global benchmark rose 3.7% to $94.46 a barrel (£82.06), while US light crude (CL=F) jumped 3.5% to $89.89 at the time of writing.

The cartel announced plans to slash 100,000 barrels a day from supply from October, taking supplies back to August levels.

The surprise move reverses the September increase of the same amount agreed last month following US president Joe Biden’s visit to Saudi Arabia.

The producer group also said it would be willing to call another ministerial meeting at any time if needed to address market developments.

Read more: Pound falls to fresh low as Liz Truss becomes new UK prime minister

OPEC+, of which Russia is also a member, are trying to stabilise the oil market which has been contending with a slowing global economy, the war in Ukraine, and the persistent COVID lockdowns in China.

Oil giants Shell (SHEL.L) and rival BP (BP.L) were among the top risers on the commodity heavy FTSE 100 (^FTSE) index.

Shares in Shell were up 1.5% and BP jumped 2.7% in afternoon trade in London on Monday.

It comes as Liz Truss became Britain’s new prime minister and leader of the Conservative party, taking over from Boris Johnson who resigned in July.

Analysts have said that Truss’s win has boosted energy giants.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Her [Liz Truss] expressed distaste for a further windfall tax on the oil and gas sector will have added to the strength of energy giants today, which had already been boosted by the ratcheting higher of gas prices and the march back upwards of crude prices over supply constraints.”