Oil prices jumped higher after Saudi Arabia and Russia said that they would support extending OPEC production cut until 2018.
Oil is now hovering at a two-week high. Brent oil, the international benchmark, is up 2.7% at $52.18. Crude oil is up 2.7% at $49.12.
Energy ministers Khalid al-Falih and Alexander Novak spoke about their policies earlier today.
In a joint statement the policymakers announced that they will do ‘’whatever it takes’’ to reduce the production of oil to five-year average levels. The ministers acknowledged the challenges that have hindered efforts in shrinking the stockpiles and bringing balance and stability to prices.
In the statement made in Beijing, the lawmakers highlighted their commitment to “stabilising the global oil market, reducing volatility, and ensuring the balancing of supply and demand in the near and long term”.
The ministers hinted that the extended production cuts should be on the same terms as the initial cuts, that output should be reduced by almost 1.8 million barrels per day.
At the end of May, OPEC members are due to meet in Vienna to discuss the details of output decreases. Here, the final decision will be made on the 9-month extension.
The policymakers said that curtailing supply has aided inventory declines for many nations in both April and May, and aided a decrease in oil at sea.
If world production tips up anymore, OPEC’s efforts will be diluted.
Non-OPEC members have increased production, muting the efforts made by the cartel. Additionally, OPEC members Nigeria and Libya are exempt from the agreement. Together, they produce over 1 million barrels of oil a day. It is unclear whether the counties will still be pardoned from the pact.