ALBAWABA – Oil prices rose around $1 on the barrel early Monday after the Kingdom of Saudi Arabia announced an additional production cut in July, by one million barrels per day.
Brent crude futures were trading up $1.02 or 1.3 percent on the barrel, while West Texas Intermediate (WTI) rose $1.02 on the barrel, or 1.4 percent, according to Reuters.
WTI crude hit a high of $75.06 per barrel before slipping to $75.06 per barrel.
Brent crude futures hit a session high of $78.73 on the barrel before settling at $77.15 a barrel.
The decision came after the discrete oil policy meeting of the members of the Organization of Petroleum Exporting Countries and their allies (OPEC+), held Sunday.
The rest of the 23 OPEC+ members announced no additional action. Whereas oil prices continued to rise Sunday on positive United States (US) jobs data and news of the US debt deal.
In fact, all other members of the organization have pledged to maintain their existing cuts until the end of 2024, Bloomberg reported.
Saudi Energy Minister Prince Abdulaziz bin Salman said he “will do whatever is necessary to bring stability to this market” following a tense OPEC+ meeting over the weekend.
“The voluntary cut, in my view, is notable more for downside protection” rather than to spur a sustained rally, said Vivek Dhar, director of mining and energy commodities research at Commonwealth Bank of Australia.
Markets may return to focus on the broader outlook of macroeconomic weakness, he told Bloomberg.
Oil in New York tumbled 11 percent in May as demand concerns weighed on the outlook, especially in China. Most market watchers including Goldman Sachs Group Inc. had expected OPEC+ to keep output unchanged, the New York-based news outlet said.
Meanwhile, the United Arab Emirates (UAE) secured a higher oil output baseline, or quota, for 2024.
The OPEC+ deal came after a long dispute with African members over how their cuts are measured, which delayed the start of the meeting by several hours, news agencies reported.
July’s additional cut may be extended, but the Saudis will keep the market “in suspense” about whether this will happen, Prince Abdulaziz said.
The minister has repeatedly sought to undermine bearish oil speculators, warning them to “watch out” in the build-up to Sunday’s meeting.
