Gasoline prices today (June 5): Rapid increase after OPEC+ decision

Oil prices rose sharply after OPEC+ extended production cuts of 3.6 million barrels per day until 2024, with Saudi Arabia continuing to reduce production.

World oil prices

According to Oilprice , at 5:45 a.m. on June 5 (Vietnam time), Brent oil price was trading up 2.26 USD, equivalent to 2.97%, to 78.39 USD/barrel. At the same time, US WTI oil price also increased 2.22 USD, equivalent to 3.09%, to 73.96 USD/barrel.

Oil prices continued to rise in the last two trading sessions of the week after the decision of OPEC+ on June 4 at the meeting in Vienna (Austria).

Oil prices are on the rise following OPEC+'s June 4 decision. Illustration photo: Reuters

Reuters reported that OPEC+ has cut 3.6 million barrels per day, or 3.6% of global demand, including a 2 million barrel/day cut late last year and a voluntary cut of 1.6 million barrels per day at a meeting in April. These cuts are effective until the end of 2023. On June 4, after seven hours of negotiations, OPEC+ reached a broader agreement on production policy. Accordingly, OPEC+ extended the cuts until the end of 2024.

Analysts said the OPEC+ decision sent a clear signal that the group is ready to support prices and try to deter speculators.

“It is a clear signal to the market that OPEC+ is ready to put and protect a floor on prices,” said Amrita Sen, co-founder of consultancy Energy Perspectives.

“Saudi Arabia has made good on its warning to speculators and clearly wants oil prices to go higher,” said Gary Ross, founder of Black Gold Investors.

As predicted by UBS analyst Giovanni Staunovo, oil prices increased sharply when the market reopened this morning (June 5).

In addition to extending OPEC+'s current 3.6 million barrels per day cut, the group also agreed to reduce its collective production targets from January 2024 by 1.4 million barrels per day from the current targets to 40.46 million barrels per day.

However, this cut would be unrealistic as the group has lowered targets for Russia, Nigeria and Angola to match current actual production levels.

In contrast, the United Arab Emirates was allowed to increase its production target by about 0.2 million barrels per day to 3.22 million barrels per day.

Can oil prices stay above $80/barrel? Illustration: Reuters

Under the OPEC+ deal, Saudi Arabia will deepen production cuts in July to limit supply into 2024 as the group seeks to prop up falling oil prices.

Saudi Arabia's energy ministry said its output would fall to 9 million barrels per day (bpd) in July from around 10 million bpd in May, the biggest drop in years.

“This is Saudi Arabia’s lollipop,” Saudi Arabia’s energy minister said at a press conference. “We want to ice the cake. We always want to add suspense. We don’t want people trying to predict what we are going to do… This market needs stability.”