Oil prices rose on Tuesday after the announcement of the extension of Saudi Arabia’s production cuts and Russian exports until the end of 2023, reaching their highest level since November.
At around 2:30 p.m. GMT (4:30 p.m. in Paris), a barrel of North Sea Brent for November delivery rose 0.92% to $89.80, shortly after rising to $90.75.
Its American counterpart, a barrel of West Texas Intermediate (WTI) due for delivery in October, rose 1.43% to $86.77, after peaking at $87.60.
The two global crude oil benchmarks reached their highest price since November after Saudi Arabia and Russia announced an extension of their cuts in crude oil production and exports.
Saudi Arabia will reduce its oil production by one million barrels per day (bpd) for “another three months” from October to December, the Energy Ministry said on Tuesday.
Russian Deputy Prime Minister Alexander Novak announced that Russia would stick to reducing its oil exports by 300,000 barrels per day until the end of 2023.
“This was reported to some extent last week,” recalls Finalto analyst Neil Wilson, “but crude oil is under strong bidding following this announcement.”
Last week, Mr. Novak actually assured that members of the OPEC+ alliance (the Organization of the Petroleum Exporting Countries and its allies) and Russia had agreed on new production cuts, which had already fueled price increases.
“The market is tight now,” summarizes Neil Wilson.
For the analyst, the announcement by the de facto alliance leader proves that the Saudis “are quite happy with these voluntary production cuts at the moment and want the market to know about them.”
The kingdom announced its voluntary production cuts in June on the sidelines of an OPEC+ meeting, which came into effect in July before being renewed several times. Russia, in turn, followed suit and also cut some of its exports.