Tracy Schuchart, CEO of HillTower Resource Advisors, provides insight into the energy sector on Making Money.
Oil prices rose to their highest level of the year last week as concerns grew about tight crude supplies after Saudi Arabia and Russia announced expansion of production cuts.
Prices for the two leading oil benchmarks – Brent crude and US West Texas Intermediate (WTI) – hit their highest level since November 2022 last week. Brent futures rose 0.8% to close at $90.65 on Friday , while WTI gained 0.7% to close at $87.51 after closing higher on Wednesday.
Both benchmarks rose about 2% last week after posting significant gains the week before of about 5% for Brent and about 7% for WTI. In 2023, the two benchmarks are up over 13%.
Saudi Arabia is extending oil production cuts until the end of 2023, sending prices soaring
Saudi Arabia and Russia announced new oil production cuts last week, pushing benchmark crude prices to their highest levels in 2023. (istock / iStock)
These gains come after Saudi Arabia and Russia announced an agreement on Tuesday to voluntarily reduce their oil production cuts by another million barrels per day by the end of 2023.
The state-run Saudi Press Agency said the new cut will increase crude oil production to about nine million barrels per day and that production levels will be reviewed monthly. Riyadh began cutting production in July and has extended the cut twice so far.
Saudi Arabia and Russia coordinated their actions with a group of oil producing countries called OPEC+, which included production cuts of about 3.66 million barrels per day. Treasury Secretary Janet Yellen called OPEC+’s previous production cut “unfortunate” and said it was “not positive” for global economic growth.
Biden admin abruptly cancels oil and gas leases in Alaska supported by state lawmakers and Native Americans
Russia and Saudi Arabia have coordinated oil production cuts with OPEC+. (ALEXANDER ZEMLIANICHENKO/POOL/AFP via Getty Images / Getty Images)
American consumers are feeling the pinch of high gasoline prices at the pump amid global production constraints.
According to AAA, the national average price of gasoline rose to $3.82 a gallon on Sunday – a historically high price for this time of year, but well below the record high of $5.01 set in June 2022.
The White House previously criticized Saudi Arabia’s production cuts. President Joe Biden said last year that the country’s decision to coordinate with Russia on oil production would have “impacts.”
BIDEN TERMINATES TRUMP-ERA OIL AND GAS LEASES IN ALASKA: ‘LIKE A VICTIM UNDER THIS ADMINISTRATION,’ GOVERNOR SAYS
President Joe Biden’s administration canceled several oil and gas leases in Alaska last week. (Al Drago/Bloomberg via Getty Images / Getty Images)
The Biden administration last week announced the cancellation of several oil and gas leases awarded to an Alaskan state economic development agency in 2021.
The US Department of the Interior has canceled seven 10-year leases for 365,775 acres in the Arctic National Wildlife Refuge (ANWR) held by the Alaska Industrial Development and Export Authority.
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Megan Henney and Thomas Catenacci of FOX Business and Portal contributed to this report.