Oil prices were up $1 a barrel on Monday after top global exporter Saudi Arabia pledged to cut production by another 1 million barrels per day from July, counteracting the macroeconomic headwinds that have depressed markets.
Brent crude futures were at $77.15 a barrel, up $1.02, after earlier hitting a session-high of $78.73 a barrel.
U.S. West Texas Intermediate crude climbed $1.02, or 1.4%, to $72.76 a barrel, after touching an intraday high of $75.06 a barrel.
The contracts extended gains of more than 2% on Friday after the Saudi energy ministry said the kingdom’s output would drop to 9 million barrels per day (bpd) in July from around 10 million bpd in May. The cut is Saudi Arabia’s biggest in years.
The voluntary cut pledged by Saudi on Sunday is on top of a broader deal by the Organization of the Petroleum Exporting Countries and their allies including Russia to limit supply into 2024 as the group seeks to boost flagging oil prices.
The group, known as OPEC+, pumps around 40% of the world’s crude and has in place cuts of 3.66 million bpd, amounting to 3.6% of global demand.
Consultancy Rystad Energy said the additional cut by Saudi is likely to deepen the market deficit to more than 3 million bpd in July, which could push prices higher in the coming weeks.
Goldman Sachs analysts said the meeting was “moderately bullish” for oil markets and could boost December 2023 Brent prices by $1-$6 a barrel depending on how long Saudi Arabia maintains output at 9 million bpd over the next six months.