On Tuesday, both Brent and US WTI (West Texas Intermediate) crude oil futures’ prices surged nearly 5 per cent following reveal of a media headline that said the OPEC-Kingpin Saudi Arabia would pursue a voluntary output cut of 1 million barrels per day, as a 14-member Organisation of Petroleum Exporting Countries (OPEC) alongside its Russia-backed allies had started off an exclusive meeting on future production cuts earlier in the day.
Aside from that, international political tension between S. Korea and Tehran had spurred up a crude oil buying-spree further. In point of fact, Tuesday’s meteoric rise in crude oil futures’ prices was almost entirely galvanized by Saudi’s voluntary production cut of 1 million barrels per day, while the cuts in effect would downsize a planned output hike of 5 million barrels per day from OPEC+ nations.
If truth is to be told, Saudi’s voluntary production cut seemed to be a part of a broad-based plan aimed at encouraging a slew of smaller OPEC+ countries to comply with the pact’s planned output cuts while holding production rates steady.
On top of that, tensions over a seized S. Korean oil tanker in the Gulf by Tehran escalated further earlier in the day after Iran had declined that the US-sanction hit oil-rich nation had been holding the S. Korean ship alongside its crews as hostages.
Nonetheless, on Monday, Iran had called on Seoul to release a $7 billion in payments which the far-east Asian country had frozen citing a US sanction.
Oil surges on Saudi voluntary production cut, Tehran tension
Citing statistics, in the day’s commodity market round off, UK crude climbed as much as 4.9 per cent to settle down at $53.60 per barrel, while US WTI crude oil futures’ prices jumped 4.9 per cent to wrap up the session at $49.93 a barrel.
Meanwhile, addressing to Saudi’s voluntary output cut of 1 million barrels per day, a head of oil markets in Rystad Energy, Bjornar Tonhaugen said, “Saudi Arabia put the cherry on the cake and if there is one way to describe what its voluntary cut means for the market, ‘happy hour’ is a pretty fitting term”.