As Saudi Arabia and Russia continue output cutbacks, supply issues push up oil prices

6 Sep 2023 , 09:47 AM

After Saudi Arabia and Russia extended their voluntary supply restrictions through the end of the year, markets began to worry about a supply shortage, which led to a little increase in oil prices on Thursday.

The price of Brent crude futures increased by 17 cents, or 0.2%, to $90.21 a barrel. On Tuesday, the sixth day of advances, it went over $90 for the first time since November.

After reaching a 10-month high in the previous session, U.S. West Texas Intermediate crude (WTI) futures increased 23 cents, or 0.3%, to $86.92 a barrel.

Tuesday saw the sharpest premium between short-term oil prices and later-dated prices since November, highlighting worries about the short-term supply shortage.

Until the end of December 2023, Saudi Arabia will prolong its voluntary 1 million barrels per day (bpd) oil output cut for a further three months, according to a report from the state news agency SPA on Tuesday.

According to a statement released on Tuesday by Russia’s deputy prime minister Alexander Novak, the country has extended its voluntary agreement to reduce its oil exports by 300,000 bpd until the end of this year.

The voluntary reduction from Saudi Arabia and Russia are in addition to the April production cut that other OPEC+ producers agreed to implement through the end of 2024.

According to SPA and Novak, both nations will evaluate their monthly cut decisions to decide whether to make even further cuts or increase output based on the state of the market.

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