Oil rises after Saudi Arabia and Russia commit to voluntary cuts. Brent at $85, 7 NOV

 Oil rises after Saudi Arabia and Russia commit to voluntary cuts. Brent at $85

Baghdad Today - Follow-up

Oil prices rose on Monday (November 6, 2023), after Saudi Arabia and Russia, the world's two largest oil exporters, confirmed the continuation of voluntary cuts in their production until the end of the year, which keeps supply tight while investors await tougher US sanctions on Iranian oil.

By midnight GMT, Brent crude futures were up 41 cents, or 0.5 percent, at $85.30 a barrel, while US West Texas Intermediate crude was at $81.05 a barrel, up 54 cents, or 0.7 percent.

In line with analysts' expectations, the Kingdom confirmed it would continue to reduce its voluntary output of one million bpd, bringing its output to nine million bpd in December, an energy ministry source said in a statement.

The source stressed that "this additional voluntary reduction comes to strengthen the precautionary efforts made by the OPEC+ countries with the aim of supporting the stability and balance of oil markets."

Following the Saudi statement, Moscow also announced a continuation of voluntary production cuts of 300, <> bpd from its crude oil and petroleum products exports until the end of December.

Both contracts saw their second consecutive weekly decline last week, down about 6 percent, driven by a easing of the geopolitical risk premium that arose from fears of supply disruptions due to the potential for conflict in the Middle East.

Israel on Sunday rejected mounting international pressure for a ceasefire as the US secretary of state sought to contain a crisis that threatens further escalation in neighboring Lebanon.

ANZ analysts said in a note: "The risk premium associated with the geopolitical background has completely disappeared after two weeks of volatile prices."

"Market focus has shifted to demand expectations that remain uncertain," they added.

Investors this week are looking for more economic data from China after the world's second-largest oil consumer reported disappointing factory data for October last week.

Tony Sycamore, analyst at IG Markets in Sydney, expects oil prices to be weighed down by news from the Middle East and technical charts this week.

He added that WTI crude needs to stay above the support level of $80 a barrel early this week, otherwise prices could fall to the low of $77.59 hit in August.

The US House of Representatives on Friday approved a bill to strengthen sanctions on Iranian oil that would impose measures on foreign ports and refineries (TADAWUL:2030) that refine oil exported from Iran if it is signed into law.