Oil prices saw an early increase on Monday as major exporters Russia and Saudi Arabia announced their commitment to maintaining additional voluntary production cuts until the end of the year.
This move, though expected, is helping to keep supply levels tight and is providing a much-needed boost to both Brent crude and West Texas Intermediate (WTI) prices. After experiencing two consecutive weeks of decline, Brent crude futures, the international benchmark, rose by 1.4% to reach $86.11, while WTI futures climbed by 1.6% to $81.80.
Saudi Arabia confirmed its intention to continue its extra cut of 1 million barrels per day throughout the coming month, as previously announced in September. In a statement on Sunday, Russia also restated its plan to maintain its additional cut of 300,000 barrels per day until the end of December.
Deputy Prime Minister Alexander Novak has revealed that a review of the cuts will be conducted next month, which will consider whether to further deepen the reductions or increase production.
These reaffirmations from the two major exporters have resulted in higher oil prices. However, it is important to note that Brent crude is still significantly below its settlement high of nearly $96.55 per barrel achieved in September 2023, even with support from the Israel-Hamas conflict.
The decision of whether Saudi Arabia and Russia will extend their production cuts into early 2024 will play a crucial role in determining the future direction of oil prices.