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This development is expected to provide sustained support to oil markets throughout the entire year.
Crude oil prices are up 1.6% on the day while Brent rose 1.2%.
Saudi Arabia will extend its additional 1 million barrels per day production cuts, which were initially implemented in July 2023, through the end of 2023.
Similarly, Russia has committed to extending its 300,000 barrels per day oil export reduction, which was in effect from September 2023, until the conclusion of the year 2023.
Roth MKM analysts commented that this “timeframe is likely a bit longer than expected as both Saudi Arabia and Russia had been looking at these cuts on a month-to-month basis so the 3-month extension by both is a bit of an upside surprise.”
“We expect oil prices to be well supported throughout 4Q23, and global inventories should fall sharply for the rest of the year,” they wrote in a report to clients.
Yesterday, Goldman Sachs analysts suggested that “the risks around our OPEC+ path, and our assumption that OPEC+ countries reverse half of the May 2023 cut in January 2024, are skewed towards lower supply for longer,” they wrote.
“We still see a potentially more aggressive OPEC+ price target as the key moderately bullish risk to our 12-month ahead Brent forecast of $93/bbl.”
