Oil prices rose by more than 1% on Monday after the world’s top crude exporter Saudi Arabia pledged to cut production by a further 1 million barrels per day (bpd) from July to counter macroeconomic headwinds that have depressed markets.

Brent crude futures were up $1.23, or 1.6%, at $77.36 a barrel by 1712 GMT after touching a session high of $78.73. US West Texas Intermediate crude gained by $1.11, or 1.6%, to $72.85 after hitting an intraday high of $75.06.

Both contracts extended gains of more than 2% on Friday after the Saudi energy ministry said the kingdom’s output would drop to 9 million bpd in July. The cut is Saudi Arabia’s biggest in years.

The voluntary cut is on top of a broader deal by OPEC+ to limit supply into 2024 as the group seeks to boost flagging oil prices. Fatih Birol, Head of the IEA, on Monday said that the chance of higher oil prices had increased sharply after the new OPEC+ deal.

Consultancy Rystad Energy said the additional Saudi cut is likely to deepen the market deficit to more than 3 million bpd in July, which could push prices higher in the coming weeks.

Published in The Express Tribune, June 6^th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.