Oil prices jump after Saudi announces supply cut
SINGAPORE: Oil prices jumped more than 1.5 per cent on Monday after top exporter Saudi Arabia announced a supply cut in December and other producers also considered reductions heading into 2019.
Front-month Brent crude futures, a benchmark for global oil prices, were at $71.59 per barrel at 0749 GMT, up 2 per cent from their last close.
US West Texas Intermediate (WTI) crude futures rose 1.6 per cent to $61.15 per barrel.
Saudi Arabia plans to reduce oil supply to world markets by 500,000 barrels per day (bpd) in December, its energy minister said on Sunday, as the country faces uncertain prospects in getting other producers to agree to a coordinated output cut.
Khalid al Falih told reporters that Saudi Aramco’s customer nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5 per cent.
Saudi Arabia is the de facto leader of the Organization of the Petroleum Exporting Countries (Opec).
An official from Kuwait, also an Opec member, on Monday said that major oil exporters over the weekend had “discussed a proposal for some kind of cut in (crude) supply next year”, although the official did not provide any detail.
Opec’s second-biggest producer Iraq has also indicated it may join in such a move.
Peter Kiernan, lead energy analyst at the Economist Intelligence Unit in Singapore, said Opec was “focused on mitigating downside risks” after crude prices declined by around 20 per cent over a month following a supply surge.