Brent crude reached a 10-month high on Tuesday after Saudi Arabia and Russia announced they would prolong their voluntary oil curbs until the end of the year.
According to a statement from the kingdom’s energy ministry, the one million barrel per day output cut that began in July will last “for another three months until the end of December 2023.”
According to a second announcement from Deputy Prime Minister Alexander Novak, Russia’s export restriction of 300,000 bpd will last for the same time frame.
For the first time since November, Brent crude increased above $90 per barrel on the news, and West Texas Intermediate, the primary US futures commodity, increased 1.9 percent to $87.16.
The biggest crude exporter in the world, Riyadh, first declared its reduction following a meeting of the OPEC+ coalition, which consists of 23 countries and also includes Russia, in June.
Although it was hinted that the cut would be “deepened” in an announcement made in early August that it would last through September, Tuesday’s news has for the time being kept it at the same level.
According to a statement from the energy ministry, that choice “will be reviewed monthly to consider deepening the cut or increasing production”.
The OPEC+ members’ surprise decision to cut production by more than one million bpd in April, which supported prices for a time but did not result in a sustained rebound, was followed by the unilateral Saudi cut.
OPEC+ decided to cut production by two million barrels per day in October of last year.
That choice infuriated the US, which at the time charged Saudi Arabia, a security ally, with supporting Russia in the conflict in Ukraine.
Although the multiple production cutbacks could raise that threshold, oil prices rose in July, the first month the Saudi-only cut went into effect, and they passed the $80 per barrel mark that analysts frequently claim Riyadh needs to balance its budget.
