Last updated: Jun 05, 2023, 11:55 PM IST
New York, United States of America (USA)
FILE PHOTO: An Oil and Natural Gas Corp’s (ONGC) well is pictured in an oil field on the outskirts of the western city of Ahmedabad, India, February 10, 2016. (Image: REUTERS)
Brent crude oil futures rose $1.23, or 1.6%, to $77.36 a barrel at 1:12 p.m. EDT (1712 GMT) after hitting a session high of $78.73
Oil prices rose more than 1% on Monday after the world’s top exporter Saudi Arabia pledged to cut production by another 1 million barrels per day (bpd) from July to counter macroeconomic headwinds that have weighed on markets. to go.
Brent crude oil futures rose $1.23, or 1.6%, to $77.36 a barrel at 1:12 p.m. EDT (1712 GMT) after reaching a session high of $78.73.
US West Texas Intermediate crude gained $1.11, or 1.6%, to $72.85 after reaching an intraday high of $75.06.
Both contracts posted gains of more than 2% on Friday after the Saudi energy ministry said the kingdom’s output would fall from about 10 million barrels a day in May to 9 million barrels a day in July. The cut is the largest in Saudi Arabia in years.
The voluntary reduction comes on top of a broader agreement between the Organization of the Petroleum Exporting Countries (OPEC) and producers, including Russia, to limit supply until 2024 as the OPEC+ group seeks to prop up declining oil prices.
Fatih Birol, head of the International Energy Agency (IEA), said on Monday that the chances of higher oil prices had increased sharply after the new OPEC+ deal.
OPEC+ pumps about 40% of the world’s crude oil and has lowered its output target by a total of 3.66 million barrels per day, representing 3.6% of global demand.
“The market is still trying to assess the impact of what the Saudi production cut actually means,” said Phil Flynn, an analyst with Price Futures Group. “Oil seems to be taking the news as very optimistic, and it is.”
SEB analyst Bjarne Schilldrop said market reaction on Monday was relatively subdued after the earlier cut by OPEC+ failed to sustain prices for long.
Consulting firm Rystad Energy said the additional Saudi cut is likely to deepen the market shortfall to more than 3 million barrels per day in July, which could push prices higher in coming weeks.
Goldman Sachs analysts said the output deal was “moderately bullish” for oil markets and could raise Brent prices by $1 to $6 a barrel in December 2023, depending on how long Saudi Arabia maintains production at 9 million bpd .
“The immediate market impact of this Saudi downgrade is likely to be lower as destocking takes time, and the market likely already has a meaningful chance of a downgrade today,” the bank’s analysts added.
Saudi Arabia raised prices of its flagship crude Arabic Light to Asian buyers in July to the highest level in six months following its pledge to cut production.
Many of the OPEC+ cuts will have little effect as lower targets for Russia, Nigeria and Angola bring them in line with their actual production levels. In contrast, the United Arab Emirates (UAE) was allowed to increase production targets by 200,000 barrels per day to 3.22 million barrels per day to reflect the increased production capacity.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Reuters)