Oil prices rose about 3% on Monday, as OPEC+ members agreed to a small production cut of 100,000 barrels per day to bolster prices. Brent crude futures for November delivery settled $2.72 higher at $95.74 a barrel, having posted almost 3% gain. Global natural gas and oil prices have been notably diverging year-to-date, which made many energy analysts think that oil prices are on the verge of a substantial upsurge even though the global economy may be entering recession. This surplus oil can be used simply for heating houses and business offices, rather than to fuel car tanks of passenger aircraft.

Just to remind, last week the G-7 reached an agreement to put a cap on Russian oil prices over the weekend and OPEC+ just agreed to cut output by 100K bpd starting in October. This small cut effectively reverses the 100K bbl/day that OPEC+ said it would add to the market last month.

The bigger picture is that OPEC+ is producing well below its output target and this looks unlikely to change given that Angola and Nigeria, in particular, appear unable to return to pre-pandemic levels of production.

Russian Deputy Prime Minister Alexander Novak said that expectations of weaker global economic growth bolstered a decision by Russia and its OPEC allies to marginally decrease oil output, although playing the political card may also be on the table. Also, Russian Energy Minister Nikolai Shulginov said the country would most likely reduce its oil production by around 2% this year.

Russia’s gas monopoly Gazprom announced that gas flows to Europe via the Nord Stream 1 pipeline would be halted indefinitely, citing lack of logistics options after repair of some gas turbines amid international sanctions. Meanwhile, European gas prices were up yesterday, on September 5, as much as 35% to €284/MWh, as European gas prices went into a parabolic ascent.