BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) led the FTSE 100 risers after the announcement of a surprise cut in oil production by OPEC+ members.
The decision caused oil prices to soar, with Brent crude trading 5.3% higher at $84.10 and West Texas Intermediate up 4.9% at $79.43. Nigel Green at deVere Group described it as a significant reduction in a market where supply was expected to be tight for the second half of 2023.
Saudi Arabia pledged a voluntary cut of 500,000 barrels per day, while Russia extended its existing 500,000b/d production cut until year-end. Shares in BP and Shell rose by 4.2% and 3.9%, respectively.
Deutsche Bank warned that it could lead to inflation and prompt central banks to maintain higher interest rates for longer, hindering economic growth.
OPEC+ comprises 13 OPEC member countries, primarily in the Middle East, and 10 non-OPEC countries, including Russia, Mexico, and Kazakhstan.
