By Adedapo Adesanya
The oil market opened on Monday with fresh news that top producers, Saudi Arabia and Russia, will extend oil supply cuts as part of efforts to help the market.
Saudi Arabia will prolong its singular oil production cut by another month, while its ally in the Organisation of Petroleum Exporting Countries and allies (OPEC+), Russia, also announced fresh curbs on exports.
The Saudi output reduction of 1 million barrels a day that started this month, which comes in addition to existing curbs agreed by OPEC+, will continue into August and could be extended further
Russia, on its part, plans to cut crude export flows next month in an effort to keep the global market balance.
This was disclosed by Deputy Prime Minister, Alexander Novak, in comments published by his press service.
“Russia will voluntarily reduce its oil supply in the month of August by 500,000 barrels per day by cutting its exports by that quantity to global markets,” Mr Novak said, providing no further details.
While Monday’s statement was related to exports, Russia earlier this year pledged to reduce its oil production by 500,000 barrels a day from a February baseline and to maintain that level through 2024.
Even as the OPEC+ producers decided to keep the current cuts until the end of next year, its top producer, Saudi Arabia, said it would voluntarily reduce its production by 1 million barrels per day in July to around 9 million barrels per day.
The cut could be extended beyond July, Saudi Energy Minister Prince Abdulaziz bin Salman said a month ago.
Oil prices were widely expected to rally this year but have instead weakened due to fears about the strength of the global economy as interest rates climb.
However, supply is still expected to tighten in the second half, according to OPEC, the International Energy Agency (IEA), as well as top investment banks.
Business Post reports that oil prices have jumped on the news with the international benchmark, Brent crude, up 0.95 per cent to $76.11 per barrel while the US West Texas Intermediate (WTI) was 1.03 per cent higher at $71.37 per barrel.
Dipo Olowookere