SINGAPORE- Oil prices were up $1 a barrel on Monday after top global exporter Saudi Arabia pledged to cut production by another 1 million barrels per day from July, counteracting the macroeconomic headwinds that have depressed markets.
Brent crude futures were at $77.15 a barrel, up $1.02, or 1.3 percent after earlier hitting a session-high of $78.73 a barrel.
US West Texas Intermediate crude climbed $1.02, or 1.4 percent, to $72.76 a barrel, after touching an intraday high of $75.06 a barrel.
The contracts extended gains of more than 2 percent on Friday after the Saudi energy ministry said the kingdom’s output would drop to 9 million barrels per day (bpd) in July from around 10 million bpd in May. The cut is Saudi Arabia’s biggest in years.
The voluntary cut pledged by Saudi on Sunday is on top of a broader deal by the Organization of the Petroleum Exporting Countries and their allies including Russia to limit supply into 2024 as the group seeks to boost flagging oil prices.
The group, known as OPEC+, pumps around 40 percent of the world’s crude and has in place cuts of 3.66 million bpd, amounting to 3.6 percent of global demand.
“Saudi remains keener than most other members in terms of ensuring oil prices above $80 per barrel, which is essential for balancing its own fiscal budget for the year,” said Suvro Sarkar, leader of the energy sector team at DBS Bank.
“Saudi will probably continue doing whatever it takes to keep oil prices elevated … and take calculated pre-emptive steps to ensure the macro-concerns potentially affecting demand are negated.” -Reuters
