Oil prices skyrocket after OPEC+ unexpectedly cuts production, with US gas prices already rising

Russia also said it is reducing production to 500,000 barrels of oil a day until the end of the year.

Published: April 3, 2023 9:13am

Oil prices rose Monday after the OPEC+ oil alliance unexpectedly cut production by more than a million barrels daily.

Brent crude oil, the global benchmark, hit $84.80 a barrel by 8:30 a.m. ET, an increase of nearly $5, or more than 6%, from when the market closed Friday.

Algeria, Gabon, Iraq, Kazakhstan, Kuwait, Oman, Saudi Arabia and United Arab Emirates are collectively cutting production by more than 1 million barrels a day starting in May until the end of the year, OPEC+ announced Monday.

At the same time, Russia said it is reducing production to 500,000 barrels of oil a day until the end of the year. This puts total oil production from most OPEC+ members and Russia at about 1.6 million barrels a day.

The reductions are in addition to the 2 million barrel-a-day cut announced in October, OPEC+ stated. Those production cuts went into effect in November.

Gas prices have been rising in the United States over the past month, with the average price for a gallon of regular gas at $3.50, up from $3.39 a month ago, according to gas monitor AAA.