Oil price nears $90 a barrel ahead of OPEC+ meeting

Oil prices rose on Tuesday amid expectations that the Organisation of Petroleum Exporting Countries and its allies, known as OPEC+, would cut output.

Brent crude jumped 0.86 percent to $89.62 a barrel and West Texas Intermediate crude leaped 0.73 percent to $84.24 a barrel.

Investors expect that OPEC+ will cut output by more than 1 million barrels per day (bpd) at their first in-person meeting since 2020 on Wednesday.

Edward Moya, a senior analyst with OANDA, told Reuters in a note that despite everything going on with the war in Ukraine, OPEC+ has never been this strong. 

He added that they would do whatever it takes “to make sure prices are supported here”. 

OPEC+ has boosted output this year after record cuts put in place in 2020 due to demand destruction caused by the COVID-19 pandemic. But in recent months, the organisation has failed to meet its planned output increases, missing in August by 3.6 million bpd.

“Whilst OPEC+ might announce a large cut (in excess of 1 million bpd), in reality, the cut could be much smaller. This is due to most OPEC+ members producing well below their target production levels,” ING analysts told Reuters in a note.

On its part, Goldman Sachs, global investment bank, said the production cut being considered was justified by the sharp decline in oil prices from recent highs.

It added that “this reinforced its bullish oil view”. 

Last month, OPEC+ agreed to cut the production quota by 100,000 barrels per day (bpd).