Oil prices rallied on Monday after top crude exporter Saudi Arabia said it would extend its voluntary output cut of 1 million barrels per day until August.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.91 per cent higher at $76.10 a barrel at 4.16pm UAE time, while West Texas Intermediate, the gauge that tracks US crude, was up 1.10 per cent at $71.42 a barrel.
The Kingdom will extend the production cut, which was initially announced for July, for another month, the Saudi Press Agency reported on Monday, citing an official source from the Ministry of Energy.
Saudi Arabia’s production for August will be about 9 million bpd and “this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets”, the source said.
The Kingdom will likely choose to prolong its additional cuts over “much of the rest of 2023”, Emirates NBD economists said in a research note on Monday.
The OPEC+ alliance of 23 oil-producing countries plans to stick to its existing output cuts until the end of 2024.