Oil maintains increases and is at four-month highs as a result of OPEC+ reduction

7 Aug 2023 , 10:41 AM

After major producers Saudi Arabia and Russia promised to limit supplies for another month to further constrict markets around the world and boost prices, oil prices increased on Monday to their highest levels since mid-April.

Brent crude futures were up 25 cents, or 0.3%, to $86.49 per barrel, while U.S. West Texas Intermediate crude was up 23 cents, or 0.3%, to $83.05 per barrel.

Last week marked the sixth straight week of gains for both contracts, the longest winning streak since December 2021 to January 2022.

Prices have been supported by a number of factors recently, including anticipations that U.S. interest rate increases will slow down, a decrease in OPEC+ supplies, and expectations that stimulus measures will help China, the world’s biggest crude importer, recover from a weak second quarter.

The leading exporter in the world, Saudi Arabia, announced on Thursday that it would prolong its voluntary production cut of 1 million barrels per day (bpd) through the end of September and that it might be further deepened. The kingdom will produce almost 9 million bpd in September.

On Thursday, Russia announced a 300,000 bpd reduction in oil shipments for September. Additionally, a Russian warship was severely damaged last week during a Ukrainian naval drone attack on the Novorossiysk naval facility in the Black Sea. The port that handles 2% of the oil supply in the world has started up again.

Saudi Aramco increased the official selling prices for the majority of grades it supplies to Asia on Saturday in accordance with production cuts for a third month in September.

According to Baker Hughes’ weekly report released on Friday, the number of working oil rigs in the United States decreased by four to 525 last week, falling for the eighth consecutive week to its lowest level since March 2022.

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