Saudi Arabia, Russia and their oil production allies announced on Sunday that they would cut production by more than 1.2 million barrels of oil per day, or more than 1 percent of global supplies, in an apparent attempt to raise prices.

Oil prices rose sharply when markets opened Sunday evening, with both US and global benchmark oil prices up 7 percent.

The production cut was unexpected as the leaders of the group collectively known as OPEC+ have said in recent days that they do not intend to change their policy. While the announcement came as a surprise, it could ultimately mean little, especially if the global economy slows down.

The Alliance produced nearly two million barrels below its supply target in February, the last month for which official production data is available. “We expect the deficit to continue,” said Ha Nguyen, global oil analyst at S&P Global Commodity Insights.

There are persistent reports that Russia is struggling to maintain production without the help of Western service companies, which wound down operations after Russia’s invasion of Ukraine more than a year ago. Saudi production has also been below the production quota set by the Organization of the Petroleum Exporting Countries in recent months.

Brazil, Canada, Guyana, Norway and the United States make up for the lack of supplies to the world market in the amount of 100 million barrels per day. Everyone is increasing oil production.

However, OPEC+’s actions are symbolic at a time when oil prices are a third lower than they were immediately after Russia’s invasion of Ukraine in February last year. OPEC+ members may be reacting to growing fears of a recession later this year following the failure of several US and European banks, as well as ongoing efforts by central banks to contain inflation. Demand for oil also fell due to strikes in France, including at refineries.

“We don’t think the cuts are appropriate at the moment given the uncertainty in the market,” said Adrienne Watson, spokeswoman for the U.S. National Security Council, adding: “We are focusing on prices to American consumers, not barrels, and prices have come down. . significantly lower than last year.”

Saudi Arabia and Russia lead the announced cuts, with cuts of 500,000 barrels each, followed by Iraq, the United Arab Emirates and Kuwait. Some analysts believe the move could boost investor speculative interest in oil futures and push oil prices up in the coming weeks.

“I’m really surprised,” said Tom Kloza, head of global energy analysis at the Oil Price Information Service. Mr Kloza said he expects the benchmark world price of Brent crude, which has hovered between $75 and $80 a barrel in recent weeks, to rise above $80. On Sunday evening, the price of Brent oil rose to $85.48 per barrel. The US benchmark West Texas Intermediate rose to $81.04.

Various energy experts assessed the possible reduction in different ways. Helima Croft, head of global commodities strategy at RBC Capital Markets, said the voluntary cuts amounted to more than 1.6 million bpd on paper, but she added, “the real effect could be around 700,000 bpd.”

The global oil market is approximately 102 million barrels per day.

In recent years, Saudi Arabia, the leader of the group, appears determined to raise prices to around $90 a barrel. Ms Croft said she saw the latest OPEC+ cut as “another sign that the Saudi leadership is making oil production decisions with a clear focus on its own economic interests.” Other experts saw this as yet another sign of Saudi Arabia’s growing independence from the United States, and its relationship with China of increasing importance. It is already a vital partner for Russia in managing oil supply levels.

The cuts, which are voluntary and begin in May, may be temporary depending on economic conditions.

Just last week, Saudi state oil company Saudi Aramco announced two deals with China to supply refineries with 690,000 barrels a day. Oil demand continues to recover from the global downturn amid the Covid-19 pandemic. Global diesel demand has nearly recovered to pre-pandemic levels, and jet fuel demand continues to rise as China emerges from Covid lockdowns.

The cuts come as gasoline prices, still significantly lower than a year ago, are rising again. The average price of regular gasoline in the US on Sunday was $3.51 a gallon, up 13 cents from a month ago. The price a year ago was $4.20 per gallon and was a major driver of inflation.

In October, the cartel agreed to cut production by two million barrels a day, but the final cut was far below that as producing countries like Libya and Nigeria agreed to cut to levels they couldn’t reach anyway.

The group last cut production in 2020 when demand fell due to the pandemic. He then gradually increased production until October.

Zolan Kanno Youngs made a report.