Oil Jumps After Russia, Saudis Agree to Extend Production Cuts

Delegates from other major producers gave their conditional support for an extension of the cuts.

01 Jul 2019, 09:01 AM IST

Oil Jumps After Russia, Saudis Agree to Extend Production Cuts

Flames burn off at an oil processing facility in Saudi Aramco’s oilfield in the Rub’ Al-Khali (Empty Quarter) desert in Shaybah, Saudi Arabia. (Photographer: Simon Dawson/Bloomberg)

(Bloomberg) -- Oil raced higher after Russian President Vladimir Putin struck a deal with Saudi Crown Prince Mohammed Bin Salman at the G-20 meeting to extend output cuts for the rest of this year and potentially into early 2020, while the U.S. and China called a temporary truce in the trade war.

Brent futures were up 1.5%, erasing Friday’s drop of 1.4%. OPEC and its allies will most likely agree to curb production for a further 9 months when they meet in Vienna this week, said Saudi Energy Minister Khalid Al-Falih. Delegates from other major producers gave their conditional support for an extension of the cuts which would go beyond the traditional half-year deals favored by the bloc. Meanwhile, U.S. President Donald Trump said he would hold off indefinitely on further tariffs on Chinese imports to allow more time to negotiate a deal.

Drivers
OPEC’s output fell for a seventh consecutive month in June as the group signaled it would keep supplies restrained at least until the end of the year. OPEC+ nations are close to finalizing a “charter” for a long-term alliance, with a document likely to be signed as soon as this week, said two delegates.

Prices
Global benchmark Brent crude for September delivery was up 97 cents at $65.71 a barrel on London’s ICE Futures Europe Exchange as at 8:11 a.m. Sydney time. Brent finished Friday down 1.4% at $64.74, but gained 0.5% over the week. West Texas Intermediate for August delivery was up 98 cents at $59.45 a barrel on the New York Mercantile Exchange.

--With assistance from James Thornhill and Saket Sundria.

To contact the reporters on this story: James Thornhill in Sydney at jthornhill3@bloomberg.net;Alex Nussbaum in New York at anussbaum1@bloomberg.net;Alex Longley in London at alongley@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, ;Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Edward Johnson, Andrew Hobbs