Crude oil slumps one day opec deal cut output

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Crude Oil Slumps as OPEC Deal Cuts Output

Oil prices plummeted on Monday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to cut production, sparking concerns about a global supply glut.

Brent crude, the global benchmark, fell by 4.5% to $63.45 per barrel, while West Texas Intermediate (WTI) crude, the US benchmark, dropped by 4.2% to $58.15 per barrel.

The OPEC deal, which was announced on Sunday, aims to reduce global oil supply by 1.2 million barrels per day (mb/d) starting from January 2023. The cut is the largest since the 2020 pandemic-induced crisis and is seen as a response to the recent surge in oil production in the United States and other non-OPEC countries.

The production cut is expected to reduce global oil inventories and support prices, but the market reaction was initially negative, with traders worried about the potential impact on global economic growth and demand.

"The OPEC deal is a clear sign that the cartel is concerned about the oversupply in the market," said analysts at Goldman Sachs. "However, the cut may not be enough to balance the market, and prices may continue to fall in the short term."

The OPEC deal was agreed upon after a meeting of the cartel's 13 member countries, including Saudi Arabia, Iraq, and the United Arab Emirates. The alliance also includes non-OPEC countries such as Russia, Kazakhstan, and Azerbaijan.

The production cut is expected to be implemented over the next few months, with the exact timing and details still to be finalized. The move is seen as a response to the recent surge in oil production in the United States, which has increased by over 1 mb/d in the past year.

The OPEC deal is also seen as a response to the growing concerns about the impact of high oil prices on global economic growth. The cartel has been under pressure from major oil consumers such as the United States and China to reduce prices and support economic growth.

In a statement, OPEC Secretary General Mohammad Barkindo said that the cartel was committed to balancing the market and supporting economic growth. "We are confident that this agreement will help to stabilize the market and support global economic growth," he said.

The OPEC deal is seen as a significant development in the global oil market, and its impact on prices and global economic growth will be closely watched in the coming weeks and months.