SINGAPORE (Reuters) – Oil prices jumped more than a dollar a barrel on Monday after senior producers finally reached an agreement on the largest production cut ever, but the gains were curbed by concerns about insufficient supply to prevent oversupply as demand from the Corona virus plunged.
After four days of controversy, OPEC, Russia and other producers in what is known as OPEC + agreed to cut production by 9.7 million barrels per day in May and June to support oil prices, which represents 10 percent of global supplies.
Brent crude futures rose $ 1.29, or 4.1 percent, to $ 32.77 a barrel by 0519 GMT, after opening at a session high of $ 33.99. And West Texas Intermediate US crude increased 1.01 dollars, equivalent to 4.4 percent, to 23.77 dollars a barrel, after reaching the high level of 24.74 dollars.
“What this agreement is achieving is enabling the global oil industry, national economies and other industries that depend on it to avoid a very deep crisis,” said Daniel Yergen, deputy chairman of IHS Market.
“This restricts building stocks, relieving pressure on prices when things return to normal – at any time,” he said.
The Kremlin said on Sunday that the leaders of the world’s three largest crude producers, Russian President Vladimir Putin, American Donald Trump and Saudi King King Salman, support the OPEC + deal to cut production.
The Saudi Energy Minister stated that Saudi Arabia, Kuwait and the United Arab Emirates volunteered more reductions than agreed, bringing OPEC + reductions effectively to 12.5 million barrels per day from current production levels.