Oil prices on world markets rose for the second week in a row

(Patria) - Oil prices on world markets rose for the second week in a row, as traders hope for increased demand from China and as OPEC and its allies announced production cuts.

The price of a barrel on the London market rose by 6.5 percent last week, to $79.89, while on the American market, a barrel increased by 9.2 percent, to $75.67.

Despite rising for two weeks in a row, the price of a barrel in London fell by about 5 percent in March, and by about 2 percent on the American market.

In the entire first quarter of this year, oil prices fell for the third consecutive quarter, which has not been recorded since 2015.

However, prices have been recovering in recent weeks, largely thanks to traders' hopes for an acceleration in the growth of the Chinese economy, the world's largest oil importer, as this should strengthen demand.

The weakening dollar also supports prices, as it makes oil cheaper for buyers in other currencies, thus increasing demand. However, price increases are limited as a slowdown in the growth of Western economies is expected, and thus a decrease in oil demand.

Central banks are trying to curb inflation by raising interest rates, which will weaken consumer spending and negatively affect economic growth. Admittedly, traders hope that the cycle of interest rate increases is nearing its end, but this will depend on inflation trends.

On the other hand, the announcement by the Organization of the Petroleum Exporting Countries (OPEC) and its allies about production cuts provided support for prices. On Sunday, OPEC+ members announced coordinated cuts in crude oil production until the end of 2023, starting from May.

Russian Deputy Prime Minister Alexander Novak announced that Russia will reduce production by 500,000 barrels per day by the end of the year.

Saudi Arabia will reduce production by the same amount, while the United Arab Emirates announced a reduction of 144,000, Algeria by 48,000, Iraq by 211,000, Kuwait by 128,000, and Oman by 40,000 barrels per day.

In total, Reuters estimates that OPEC+ production will be reduced by 1.16 million barrels per day, Hina reports.