By Barani Krishnan

Investing.com – Crude markets suffered their largest one-day drop in a month Thursday as Russian President Vladimir Putin claimed that the OPEC+ cartel, which also includes Russia, might release more oil than what it announced.

The oil prices also came under severe pressure throughout the day, as China and India fought back against rising energy costs that they claimed could lead to runaway inflation.

Putin surprised markets by announcing that the OPEC+ was increasing oil output “a bit more than agreed.” It was in direct contradiction to statements that most members of the 23 nation oil-producing alliance (led by Saudi Arabia) had been making. Officially, OPEC+ stated at its October meeting that it would not increase oil production by more than the 400,000 barrels per daily it has previously committed, despite a worldwide supply shortage which has pushed prices to their highest level in seven years.

“Not all countries are able to significantly raise oil production,” Putin said, implying that Russia might be the exception. In addition to Putin, the Oil Minister of Iraq also stated that Baghdad is capable of pumping more.

The OPEC+ arrangement, in place since 2015, has worked largely due to the cooperation between Russia and Saudi Arabia — the world’s largest oil producers, aside from the United States, which has lost its number one ranking since the onset of the coronavirus pandemic in March 2020.

However, there have been problems with the Moscow-Riyadh accord. A disagreement between the two on production led to a brief collapse of OPEC+’s working order before the pandemic, sparking a global supply glut that sent U.S. crude prices into negative territory the first time ever.

In Thursday’s session, U.S. crude’s benchmark was down $1.69, or 2%, to $81.73 per barrel by 1:30 PM ET (17:30 GMT) — its biggest one-day drop since Sept 20. WTI reached $83.47 on Wednesday — a seven-year high.

The global standard for oil was London-traded crude. It fell by $1.76 or 2.1% to $84.06. On Tuesday, Brent reached an all-time high of $86.04 for the third year.

On Thursday, prices in the energy sector were also affected by falling crude oil markets in Asia.

The benchmark January thermal coal contract on the Zhengzhou Commodity Exchange settled at below 1,588 yuan from Tuesday’s record high of 1,982 yuan after China’s National Development and Reform Commission said it will “study specific measures” to push down local prices for coal.

India is the third largest energy consumer in the world, after China and the United States. It said Thursday that it wants oil producers to think about supplying crude oil under long-term agreements at fixed rates. This will help protect consumers against price volatility.