The oil alliance OPEC+ has announced a surprising reduction in oil production. From May onwards, production is expected to be around one million barrels (159 litres each) per day lower. Saudi Arabia led the cartel on Sunday with a production cut of 500,000 barrels per day. The Saudi Ministry of Energy said it was a "voluntary cut," writes the Saudi Press Agency.

Other members such as Kuwait, the United Arab Emirates and Algeria followed suit, while Russia wants to continue its production cuts until the end of 2023. This cut came into force in March and was supposed to expire at the end of June.

As a result, around one million barrels of crude oil per day less are likely to flow onto the market from May onwards than previously expected. From July, it will be more than one and a half million barrels less than previously thought, as from then on the extended cut of Russia will be added. From the middle of the year, the world will have to make do with significantly less oil from countries of the cartel.

The influence of the crude oil network from 23 countries continues to be considerable. Allianz has a global market share of about 40 percent. The alliance consists of the traditional members of the OPEC cartel and additional countries that do not actually belong to OPEC. This includes Russia.

The current step comes as a surprise not only because changes in production usually take place after fixed consultations. The OPEC countries had also signaled constant production until recently. Just a few weeks ago, Saudi Energy Minister Abdulaziz bin Salman said that OPEC+'s production target should be maintained until the end of the year.

Is the price of oil rising now?

A reaction on the oil market will not be observed until Monday, as there is no trading on the weekend. In recent weeks, prices had tended to be under pressure, falling to their lowest level since the end of 2021 in March. This price development could be an explanation for the current reduction in subsidies.

The background to the falling prices was, on the one hand, fears of recession as a result of the war in Ukraine and the sharp interest rate hikes by many central banks. Added to this was the recent turbulence in the banking sector in the USA and Europe. Last week, crude oil prices recovered somewhat.

The surprise cut in oil production boosted optimism on Asian stock markets on Monday. Goldman Sachs raised its forecast for Brent to $95 a barrel by the end of the year and $2024 for 100. "Today's surprise cut is in line with the new OPEC+ doctrine of acting preemptively because they can do so without significant loss of market share," Goldman Sachs said. "This cut, while surprising, reflects important economic and probably political considerations."

The 225-stock Nikkei index was 0.4 percent higher at 28,150 points. The broader Topix index rose by 0.6 percent and stood at 2015 points. The Shanghai stock exchange was up 0.6 percent. The index of major companies in Shanghai and Shenzhen gained 0.9 percent. Worse-than-expected economic data from Japan and China could not dampen investors' buying mood. According to the Tankan report, the banking turbulence of recent weeks weighed on the business climate in Japan. In China, weakening demand slowed down industry.