Oil prices jumped by about four percent, on Friday, to a five-week high, supported by the OPEC + decision to make the largest supply cut since 2020, despite concerns about recession and high interest rates.
Oil rose for the fifth day in a row despite the dollar’s rise after data showed that the US economy is creating jobs at a strong pace, while reinforcing expectations that the Federal Reserve will continue to tighten monetary policy sharply.
A stronger dollar makes oil more expensive for holders of other currencies, and usually affects oil and other risky assets.
Brent crude futures rose $3.50, or 3.7 percent, to $97.92 a barrel. US West Texas Intermediate crude also rose $4.19, or 4.7 percent, to $92.64 a barrel.
That was the highest closing level for Brent since August 30 and for US crude since August 29. The two contracts recorded gains for the second week in a row, and the largest percentage gain since March this week. Brent rose during the week by about 11 percent and US crude by 17 percent.
“One of the major implications of the recent OPEC cuts is the likely return to the $100 oil price,” said Stephen Brennock of BVM oil brokerage.
The cut decided by the OPEC + bloc, which includes the Organization of the Petroleum Exporting Countries (OPEC), comes before the European Union’s ban on Russian oil, which will reduce supplies in a market already suffering from a tight supply.
On Thursday, US President Joe Biden expressed his disappointment with the plans of OPEC +. He and other officials said the United States was studying all possible alternatives to prevent price hikes.