Stock market: oil drags Europe along and the price of petrol will rise

European stock markets rise cautiously after the decision by OPEC+ (the cartel of oil producers extended to include Russia) to cut oil production by one million barrels, with the race in energy stocks (+3.9% for the Stoxx index sector) decisive in guiding the price lists. London rose by 0.5%, Milan by 0.3%, Paris by 0.2% while Frankfurt remained unchanged. Futures on Wall Street were mixed, with those on the Nasdaq and Dow Jones down slightly and those on the S&P 500 up 0.2%.

The price of diesel and petrol will rise again in the coming weeks. It all stems from this surprise move by OPEC+, which announced a cut in production starting May 1st and throughout 2023. The intention is clear: to get the price of crude oil back up as quickly as possible, after the peak minimum reached in mid-March and despite the already marked rise in prices in recent weeks. Specifically, the cut will be one million barrels per day for the rest of the year: half a million in Saudi Arabia alone, then 211,000 in Iraq, 144,000 in the United Arab Emirates, 128,000 in Kuwait, 78,000 in Kazakhstan, 48,000 in in Algeria and 40,000 in Oman. Russia will continue with the cut of 500,000 barrels per day already communicated, but will not stop in June and continue until December.

March decline
Crude oil prices fell sharply in March, hitting a low of $66 a barrel. But in a couple of weeks they have already risen above 75. It is evidently not enough for producers to sleep peacefully: the goal is to bring the price above 80 dollars a barrel as soon as possible. And taking a look at the first responses that came from the markets in the night and in the early morning, the result has basically already been achieved. Oil prices were up nearly 6% in the Asian market this morning: the West Texas Intermediate contract jumped 5.74% to $80.01 a barrel, while Brent crude jumped 5.67% to $84. 42 dollars.

The producers’ decision will inevitably have an impact on consumers, with petrol and diesel prices rising in the coming weeks. Indeed, after a slight decline and substantial stability, the price at the pump could start to grow significantly again. For the Saudi Energy Minister, it is a question of “safeguarding the stability of the oil market”.