Oil falls by more than $2 due to demand concerns, and Saudi Arabia confirms cuts until the end of the year

LONDON, October 4 (Reuters) – Oil prices fell on Wednesday, as demand concerns resulting from macroeconomic headwinds overshadowed pledges by Saudi Arabia and Russia to continue crude production cuts until the end of 2023.

By 1228 GMT, Brent crude futures fell $2.02, or 2.22%, to $88.90 per barrel, while US West Texas Intermediate crude fell $2.10, or 2.35%, to $87.13 per barrel.

The OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting held online on Wednesday kept the group’s production policy unchanged, two sources said during the meeting.

A statement said that the Joint Ministerial Oversight Committee will meet on November 26.

Oil prices remain under pressure due to demand concerns stemming from macroeconomic headwinds.

“Market attention has shifted from focusing on short-term distress to the implications of interest rates remaining high for longer, the weak macro environment that entails, and how OPEC+ plans to deal with that when it meets on November 26,” the Investec analyst said. Callum McPherson.

The Saudi Ministry of Energy confirmed on Wednesday that it will continue its voluntary reduction in crude oil supplies by one million barrels per day until the end of this year.

Russia said it will continue its current cuts to crude oil exports of 300,000 bpd until the end of the year, and will review the voluntary production cut of 500,000 bpd, which was canceled in April, in November.

Russian Deputy Prime Minister Alexander Novak said that the joint voluntary cuts by Russia and Saudi Arabia helped achieve balance in oil markets.

Novak also welcomed the positive impact of the Kremlin’s ban on diesel and gasoline exports on the domestic market, adding that the government continues to monitor fuel prices in Russia.

Earlier on Wednesday, Kommersant daily reported that Russia may be ready to ease the diesel ban in the coming days, citing unidentified sources.

The rise in the US dollar could also affect investor sentiment.

John Evans, an analyst at BVM, said the current dollar strength is “a rally that will continue to haunt all markets including oil, even when, as there is now, there is a compelling fundamental backdrop.”

As the trading currency for oil, a strong dollar makes oil relatively expensive for holders of other currencies, which can dampen demand.

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