Oil prices hit 11-month highs and were on track for a weekly gain on Friday, boosted by Saudi Arabia’s pledge to cut output announced this week.
Crude oil prices on both the Brent and WTI exchanges reached the highest levels since February, according to Reuters. Brent reached $55.35 at last check (10:50 AM EST), while the WTI reached $51.55.
Both were on track for weekly gains of more than 6%.
According to Bloomberg’s Julian Lee, Saudi Arabia’s surprise decision to announce a large cut in production followed a meeting of OPEC+ representatives on Monday which “broke up in disarray…with Russia pressing for output targets to be raised by 500,000 barrels a day in February. Most other members wanted to leave them unchanged as the coronavirus continues to roil global economies and the recovery in demand remains fragile.”
“Saudi Arabia appeared particularly worried,” Lee writes. “In his opening remarks, the country’s oil minister warned repeatedly against squandering gains made by the group’s hard-won sacrifices last year for “an immediate, but illusory, benefit.” He went so far as to suggest it was even necessary to reverse the output increase that had just come into effect.
“And yet, in the end, the collective responsibility previously demanded by the Saudis was jettisoned and everyone got what they were asking for.”
[Click here to read the item from Lee in Bloomberg via Yahoo.com]
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman called this week’s surprise oil output cut for February and March a “wonderful present” for the oil industry and will affect both domestic sales and exports, and said that the choice for a cut was commercial and not political.
