Oil futures surged after Saudi Arabia led a surprise oil-production cut across several OPEC+ member countries that will remove more than 1 million barrels of oil a day from output by May.
In an announcement on Sunday, Saudi Arabia’s Ministry of Energy stated that the kingdom will implement a voluntary cut of 500,000 barrels a day from May until the end of 2023, in conjunction with other countries.
It said that the “voluntary cut is in addition to the reduction in production” agreed at an OPEC meeting in October and “is a precautionary measure aimed at supporting the stability of the oil market.” OPEC+ agreed in October to cut production by 2 million barrels a day from November, a move that angered the Biden administration.
Russia’s deputy prime minister, Alexander Novak, said his country would extend a March production cut of 500,000 barrels a day through the end of the year. OPEC+ is made up of members of the Organization of the Petroleum Exporting Countries and its allies, including Russia.
“Today, the world oil market is experiencing a period of high volatility and unpredictability due to the ongoing banking crisis in the U.S. and Europe, global economic uncertainty and unpredictable and shortsighted energy policy decisions. At the same time, predictability in the global oil market is a key element in ensuring energy security,” Novak said in a statement.
News of the production cuts sent prices soaring Front-month West Texas Intermediate crude for May delivery CL.1, 0.46% were near $80 a barrel while Brent crude BRN00, +0.41% the global benchmark, neared $85 a barrel.