Oil extends rally as OPEC+ mulls largest output cut since 2020

Oil surged after OPEC+ said it was considering cutting its production limit by as much as 2 million barrels a day, double what was previously anticipated.

West Texas Intermediate closed at a three-week high Tuesday after posting the biggest advance since July on Monday. OPEC’s decision could result in the cartel’s largest output reduction since the deep cuts at the outset of the pandemic, but the actual impact on global oil supply could be significantly smaller because several members already are pumping far below their quotas.

“The potential cut increasing from 1 million barrels a day to 2 million barrels implies a more aggressive approach,” said Stacey Morris, head of energy research at Alerian VettaFi. “It may signal greater concern around demand and the health of the global economy.”