Oil Prices Rise as Saudi Arabia and Russia Extend Production Cuts Amid Geopolitical Tensions

In a move to maintain a tight supply, the world’s largest oil exporters, Saudi Arabia and Russia, confirmed the extension of voluntary production cuts until the end of the year. Brent crude futures increased by 0.5 percent, reaching $85.30 per barrel, while US West Texas Intermediate crude rose to $81.05 per barrel, up 0.7 percent. Saudi Arabia plans to reduce its daily production by one million barrels, limiting it to nine million barrels per day in December. Moscow also pledged to continue its voluntary production cut of 300,000 barrels per day until the end of December.

Despite the rise, oil prices experienced a second consecutive weekly decline, dropping by approximately 6 percent. The decline was influenced by a reduction in the geopolitical risk premium, easing concerns about supply disruptions in the Middle East. Geopolitical tensions in the region remain high, with Israel refusing international pressure for a ceasefire and the US Secretary of State attempting to manage a crisis that could escalate further in Lebanon.

Investors are closely monitoring economic data from China, the world’s second-largest oil consumer, after disappointing factory data was released in October. WTI crude oil must stay above the $80 per barrel support level to avoid falling to the previous low of $77.59 seen in August.

Additionally, the US House of Representatives passed a bill on Friday to strengthen sanctions on Iranian oil. If signed into law, the bill will impose measures on foreign ports and refineries processing oil exported from Iran, further impacting the global oil market.