And Saudi Arabia announced the availability of an additional temporary voluntary reduction of one million barrels per day, starting next July 1, for a period of one month, which can be extended, which means that total voluntary reductions for the Kingdom will reach 1.5 million barrels in July.
This is the biggest reduction in Saudi Arabia in years.
The voluntary cut comes on top of a broader agreement between the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, to limit supply until 2024, as the OPEC+ group seeks to boost oil prices. low oil prices.
The OPEC+ alliance has agreed to extend production cuts of 3.66 million barrels per day, equivalent to 3.6% of global demand, until the end of 2024, as part of a broader agreement on production policy reached after seven hours of talks.
For his part, Fatih Birol, head of the International Energy Agency, said on Monday that the opportunity for a sharp rise in oil prices had increased after the new OPEC+ deal.
“The market is still trying to gauge the impact of what the Saudi production cut really means,” said Price Futures Group analyst Phil Flynn.
He added that the market sees these moves as favorable to the upward movement in oil prices.
Bjarne Schildrup, analyst at SEB, said the market reaction on Monday was relatively calm, after the previous OPEC+ cut failed to support prices for long.
Rystad Energy, a consultancy, said Saudi Arabia’s further cut is expected to widen the market deficit to more than 3 million barrels per day in July, which could push prices higher in the coming weeks.
Goldman Sachs analysts said the meeting was supportive of higher oil prices, and could add to the price of Brent crude through December 2023, between $1 and $6 a barrel, depending on how long Saudi Arabia will maintain production at 9 million barrels per day over the next six months.
The bank’s analysts added: “It is likely that the immediate impact of this Saudi reduction on the market will be less, as it takes time to remove stocks, and it is likely that the market will already establish certain possibilities regarding the effects of today’s reduction.”
price movements
Brent crude futures were up $1.14, or 1.50%, at $77.25 a barrel at 1720 GMT.
Nymex crude also rose 97 cents, or 1.34%, to $72.70 a barrel.
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