2023-11-06T06:12:46+00:00
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/ Oil prices rose on Monday after Saudi Arabia and Russia, the two largest oil exporting countries in the world, confirmed the continuation of the voluntary reduction in their production until the end of the year, which keeps supply tight while investors await more severe US sanctions on Iranian oil.
By midnight GMT, Brent crude futures rose 41 cents, or 0.5 percent, to $85.30 per barrel, while US West Texas Intermediate crude reached $81.05 per barrel, up 54 cents, or 0.7 percent.
A source at the Saudi Ministry of Energy said in a statement that, in line with analysts’ expectations, the Kingdom confirmed that it will continue to reduce its voluntary production of one million barrels per day, and thus its production will reach nine million barrels per day in December.
The source confirmed, “This additional voluntary reduction comes to strengthen the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.”
Following the Saudi statement, Moscow also announced the continuation of a voluntary production cut of 300,000 barrels per day from its exports of crude oil and petroleum products until the end of December.
Both contracts witnessed their second consecutive weekly decline last week, down about 6 percent, driven by an easing of the geopolitical risk premium that arose from fears of supply disruptions due to the possibility of a widening conflict in the Middle East.
On Sunday, Israel rejected increasing international pressure for a ceasefire while the US Secretary of State sought to contain the crisis that threatens to further escalate in neighboring Lebanon.
“The geopolitical risk premium has completely disappeared after two weeks of volatile prices,” ANZ analysts said in a note.
“The market focus has shifted to the demand outlook, which remains uncertain,” they added.
This week, investors are looking forward to more economic data from China after the world’s second-largest oil consumer released disappointing factory data for October last week.
Tony Sycamore, an analyst at IG Markets in Sydney, expects oil prices to be affected by news from the Middle East and technical charts this week.
He added that WTI crude oil needs to remain above the support level at $80 a barrel early this week, otherwise prices may fall to the lowest level of $77.59 recorded in August.
On Friday, the US House of Representatives approved a bill to strengthen sanctions on Iranian oil that would impose measures on foreign ports and refineries that refine oil exported from Iran if it is signed into law.