Oil price surged on Monday by 2% following the announcement from Saudi Arabia, the world’s top oil exporter, that it plans to deepen its output cuts from July. This move is aimed at offsetting the negative impact of macroeconomic factors that have been weighing down on the markets. Brent crude futures rose to $77.64 a barrel, an increase of $1.51 or 2%, while U.S. West Texas Intermediate crude climbed to $73.15 a barrel, a gain of $1.41 or 2%.
The Saudi energy ministry stated on Sunday that the country’s production would decrease to 9 million barrels per day in July, down from around 10 million barrels per day in May. This reduction represents one of the largest cuts by Saudi Arabia in recent years. It is important to note that this voluntary cut is in addition to the ongoing supply limitations set by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, who have committed to restricting supply until 2024 in an effort to boost oil prices.
OPEC+ currently accounts for approximately 40% of global crude oil production and has implemented cuts of 3.66 million barrels per day, equivalent to around 3.6% of global demand.
These developments indicate a concerted effort by major oil-producing nations to stabilize and increase oil prices. The market has responded positively to this news, reflecting the expectation of reduced supply and increased demand.
Source: Reuters
