Saudi Arabia plans to deepen oil output cuts in July and this has shut up oil prices by as high as two per cent (2%), more than $1.5 a barrel, on Monday.
The world’s top exporter of crude oil had pledged to cut production by additional one million barrels per day from July in response to the macroeconomic headwinds currently depressing markets.
Prime Business Africa reports that Brent crude futures were up $1.51, or 2% at $77.64 after midnight on Monday. It had earlier hit a session-high of $78.73.
Meanwhile, the U,S. West Texas Intermediate crude climbed $1.41, or 2%, to $73.15 a barrel, after hitting an intraday high of $75.06 a barrel, according to Reuters.
This means that the two contracts extended gains, after they rose more than 2% on Friday as Saudi energy ministry, in what appears to be its biggest reduction in years, said on Sunday that its output would finally drop 9 million barrels per day (bpd) in July from 10 million bpd in May.
The voluntary cut announcement by Saudi authorities is an addition to the boarder deal by the Organisation of Petroleum Exporting Countries (OPEC) and their allies (including Russia) to limit supply next year in a move to boost prices.
Known as OPEC+, the group pumps about 40% of global crude.