Russia will reduce its oil production by 7% in 2023, and oil prices jumped higher as fear of a market recession grew.
Wall Street’s main index opened lower on Friday morning trading hours, yet the stock rebounded after a relieving inflation rate report. Dow Jones Industrial Average industrials gained 0.48% to 33,360.01 basis points. The Nasdaq feature recovers its 5 basis point loss from the previous day and gains 0.7 percent.
The S&P 500 main index rose 0.48 percent or 17.2 basis points.
Meanwhile, surveys and reports say that the consumption rate in the U.S. declined by 0.1%. Personal wages in the U.S. jumped by 0.4% in the current month, beating expectations of 0.3%.
The data shows that inflation is slowing down, which added some support to some stocks in the previous days. Concerning the market’s exception and future prospects, the excitement is turning bearish. However, other sectors jumped significantly by the end of the midday trading hours.
For the first time in months, global oil prices jumped by an average of 4%.
West Texas Intermediate crude increased by 3,08% to $79,91 per barrel, while Brent crude increased by 4% to $82,2 per barrel.
According to different market sources, the rise in oil prices came after Russia threatened to reduce its oil production.
The EU’s oil production and price cut decisions received a negative reaction from the world’s top oil producers and exporters, including Russia and Algeria.
According to Russian Prime Minister Novak, the country might reduce its oil production by 5–7% in 2023. Market experts think this will cause a sharp decline in oil supplies and lead to a significant increase in market oil demands.
Plus, the Russian news channels say that Russia will reduce its oil exports by an average of 500 to 700 thousand barrels per day. In terms of the long-term effects, this reduction in oil production will hurt the Eurozone stock market. Inflation in Europe is still peaking, and the energy crisis is getting worse as we speak.
So, why is Russia cutting its daily oil production?
On the fifth of December, the Seven Nations members and EU members agreed that the maximum price for oil would be barely $60 per barrel. Oil export members and even some OPEC members see that the decision is far too extreme. Russia sees that its only solution is to cut its oil exports and production and weaponize oil as it did before with gas prices.
Meanwhile, gold prices hit the $1800 per ounce level for the first time in the past three months. The increased tension in the oil sector boosted gold and commodity market prices. Gold prices fell significantly after nearly reaching their high record of $2,000 per ounce back in August.
As for the U.S. dollar main index, the index rose against its other currency peers the Euro and the Japanese yen. The increase in gold prices boosts the dollar’s momentum in the market despite the chaotic crypto-market conditions.