Oil prices rose on Monday after Saudi Arabia and Russia, the world’s two largest oil exporters, confirmed their commitment to voluntary supply cuts until the end of the year.
A source from the Saudi Ministry of Energy stated in a press release that the Kingdom had reaffirmed on Sunday that it would continue its voluntary production cut by one million barrels per day in December, keeping production at nine million barrels per day.
Moscow also announced that it would continue its voluntary supply cut of 300,000 barrels per day of crude oil and petroleum products until the end of December.
Analysts at ING noted in a memo that the oil market is expected to have a surplus in the first quarter of next year, adding that this “could be enough to persuade the Saudis and Russians to continue with the reductions.”
“The market is not pricing in too much geopolitical risk at current levels, so that remains a key upside risk,” said Suvro Sarkar, a DBS analyst based in Singapore.
However, the decrease in crude consumption in Chinese refineries could limit the gains.
On Friday, the US House of Representatives passed a bill to bolster sanctions on Iranian oil that would impose measures on foreign ports and refineries that process petroleum exported from Iran if it is signed into law.
In the US, oil rigs fell 8 to 496 last week, their lowest since January 2022, energy services firm Baker Hughes said in its weekly report on Friday.
Last month, data and analysts indicated a steady decline in US sea-borne crude oil imports from OPEC+ alliance members, including Saudi Arabia, last year.
This reduction tightens supplies for the American market while supporting other markets like Europe.
The changing level of US crude oil imports from OPEC and other exporters, along with US shipments to Europe, is likely to have a more direct impact on global oil prices due to the alterations this year on Brent crude.
