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Crude oil price jumps in response to OPEC+ two million output cut

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The Organization of the Petroleum Exporting Countries (OPEC+) announced members of the oil group, comprising Nigeria, have agreed to cut down global crude oil production output, and this resulted in the price of the commodity rising.

They concluded on slashing the production output by two million barrels per day, starting from November. The decision is viewed as a way to support declining crude oil price.

Late last year and early 2022, crude oil had enjoyed a boom in price, as demand for the commodity resumed after disruption caused by the Coronavirus outbreak and the lockdown implemented to curb further spread.

High demand for crude oil following resumption of industries after the lockdown across the world dragged the prices of crude oil and US equivalent oil, West Texas Intermediate (WTI) above $100, far above the $20 and below price of April 2020.

Read also: BUSINESS ROUNDUP: Angola overtakes Nigeria in crude oil production; Nigerian govt threatens sanctions over flight tickets; and other stories

However, since the second quarter of 2022, crude oil and American WTI prices have fallen below $100, with both selling for $91.80 and $86.52 respectively, prior to the OPEC+ decision.

The cut in crude production output is expected to reduce availability of the commodity or prevent it from flooding the market, as supply overshooting demand will continue to push the price downward.

But with the slash in output, demands would surpass supply, pushing the value of crude oil up. And since the announcement on Wednesday, crude oil price has jumped 1.71 per cent to $93.37 before Thursday morning.

Also, American West Texas Intermediate had also seen 0.27 per cent hike in its market price which climbed to $88.00.

Meanwhile, it was gathered that countries like Nigeria, that have been unable to meet their quota will not be expected to cut production by two million bpd, but by one million bpd. United Arab Emirates, Iraq, Saudi and Kuwait are the countries leading with the two million cuts.

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