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Oil price on the rise as Russia and Saudi Arabia back supply cut

Oil prices have risen more than 3% after Saudi Arabia and Russia said a deal to cut production should be extended until March next year. Brent Crude jumped to $52.52 following a meeting in China between the two countries.

The oil cartel Opec, which is dominated by Saudi Arabia, and non-Opec producers led by Russia have been attempting to use the output cut to drive up prices. However, the US is not included and its high output could undermine efforts.

Both Brent and WTI crude lost some of their earlier gains on Monday to trade 2.6% higher at $52.17 and $49.23 respectively.

Following the meeting in Beijing, Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak said, ”The two ministers agreed to do whatever it takes to achieve the desired goal of stabilising the market and reducing commercial oil inventories to their five-year average level.”

Mr Falih added, ”We’ve come to the conclusion that the agreement needs to be extended.”

The two countries produce 20 million barrels of crude oil a day, about one-fifth of global consumption, and other oil-producing nations are expected to follow their lead over cuts.

Russian President Vladimir Putin said extending output cuts for a further nine months was the right thing to do and commented, ”We support the proposal.”