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LONDON, Sept 5 (Reuters) – Oil prices rose more than 1% on Tuesday after Saudi Arabia and Russia announced another extension of their voluntary supply cuts, bringing the cut by a total of 1.3 million barrels a day (bpd ) for a further three months until December .
November Brent crude futures were up $1.21, or about 1.4%, to $90.21 a barrel by 1353 GMT, breaking above $90 for the first time since November last year. Dollar.
Meanwhile, October futures for U.S. West Texas Intermediate (WTI) crude rose $1.59, or about 1.9%, to $87.14 a barrel.
Riyadh’s decision to extend its voluntary cut by 1 million bpd will be reviewed monthly to assess whether to deepen the cut or increase production, state news agency SPA said on Tuesday.
OPEC+ member Russia also extended its voluntary cuts until the end of the year “to maintain stability and balance in oil markets,” Deputy Prime Minister Alexander Novak said on Tuesday.
The world’s second largest oil exporter cuts its exports by 300,000 bpd for the period. Along with Saudi Arabia, the country has cut production and exports on top of existing OPEC+ supply cuts.
Russia had said it would voluntarily cut oil exports by 500,000 bpd in August, about 5% of its production, and by 300,000 bpd in September. Russia is also reducing its oil production by 500,000 bpd by the end of 2024.
Although it was widely believed that Saudi Arabia would extend its voluntary cuts into October and Russia had indicated it also plans to extend its cuts into next month, the three-month extension came as a surprise.
“It looks like they are trying to double the recent price action and capitalize on it. Create a large buffer for the end of the cuts,” OANDA analyst Craig Erlam told Reuters.
Brent, which accounts for more than three-quarters of the world’s traded oil, has been rising since late June after Riyadh first announced its voluntary cuts.
The premium of the front-month Brent contract over the six-month contract rose to more than $4 a barrel on Tuesday, the highest since November 2022. This pattern, dubbed backwardation, suggests a tightening of supply for on-time delivery.
Reporting by Natalie Grover in London, Katya Golubkova in Tokyo and Andrew Hayley in Beijing. Edited by Sharon Singleton, Jason Neely, Jan Harvey, David Goodman, Alexandra Hudson
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