OPEC and its allies led by Russia on Monday agreed on a small oil production cut to bolster prices that have slid on fears of an economic slowdown.
The oil producers will reduce output by 100,000 barrels per day (bpd), amounting to only 0.1% of global demand, for October and also agreed they could meet any time to adjust production before the next scheduled meeting on Oct. 5.
The decision essentially maintains the status quo as OPEC has been observing wild fluctuations in oil prices, being pulled by multiple factors in both directions.
"OPEC+ is wary of protracted price volatility generated by weak macro sentiment, thin liquidity and renewed China lockdowns, as well as uncertainty over a potential U.S.–Iran deal and efforts to create a Russian oil price cap," said Matthew Holland at Energy Aspects.
Top OPEC producer Saudi Arabia last month flagged the possibility of output cuts to address what it sees as exaggerated oil price declines.
Benchmark Brent crude oil has dropped to about $95 a barrel from $120 in June on fears of an economic slowdown and recession in the West.
It was also dragged down by a potential supply boost from Iranian crude returning to the market if Tehran is able to revive its 2015 nuclear deal with global powers.
Iran is expected to add 1 million bpd to supply, or 1% of global demand if sanctions are eased, though the prospects for a nuclear deal looked less clear on Friday.
Signals from the physical market, however, suggest that supply remains tight and many OPEC states are producing below targets while fresh Western sanctions are threatening Russian exports.
Russia has said it will stop supplying oil to countries that support the idea of capping the price of Russian energy supplies over its military conflict in Ukraine.
Russia's gas deliveries in Europe, meanwhile, have been cut further, which is likely to spark more price spikes.
"An output cut won't make them any friends at a time when the world is facing a cost-of-living crisis," said Oanda analyst Craig Erlam.