Brent hits five-week high as Saudi production declines

International Benchmark Brent rallied over 3% in European trade for the third straight session, hitting five-week highs after Saudi Arabia vowed a production cut of a million bpd for a month in July.

The OPEC+ alliance decided to extend current production cuts for an additional year to achieve stability and support weakening prices. 

Brent rose 3.25% today to $76.68 a barrel, the highest since May 2, after surging 2.7% on Friday, the second profit in a row. 

Saudi Production Cuts

Saudi Arabia, OPEC's largest oil producer, announced a voluntary production cut of a million bpd starting July for a single extendable month. 

Saudi Arabia's oil minister described the cut as a "gift" to stabilized the market, noting that recent OPEC+ decisions don't target a specific price range.

OPEC+ Decisions

The OPEC+ alliance in accordance with Russia decided to extend production cut for another year starting January 2024. 

The oil cartel is currently executing a cut of 3.65 million bpd starting last May to the end of the year.

Russian deputy prime minister Alexander Novak said that extending production cuts for a year would serve to stabilize the market. 

Estimates

The Australian Commonwealth bank says that Saudi Arabia might extend its production cuts into July if Brent futures remained between $70 and $75 a barrel.