Crude oil price rises to $90 per barrel after Russia, Saudi announcement

Moscow/Riyadh/London – The crude oil price has seen a jump after the leading countries of the oil sector, Russia and Saudi Arabia, announced to cut fuel production. On Tuesday, crude oil price crossed the $90 mark per barrel, the highest since November 2022. Analysts have estimated, on the backdrop of this increase, that crude oil prices will cross the $100 per barrel mark until the end of the year.

Moreover, the OPEC + group of major crude oil-producing countries decided to cut a total of 1.15 million barrels per day of crude oil production in May. Later, an aggressive decision had been taken in June to continue this cut till December 2024. Apart from this decision of OPEC +, Russia and Saudi had announced cutting more fuel production voluntarily.

Besides, Russia had announced an additional cut of 500,000 barrels. At the same time, in June, Saudi Arabia voluntarily decided to extend the reduction in crude oil production for some time. According to this, Saudi Arabia had cut crude oil production by one million barrels per day (bpd) in July. Also, Deputy Prime Minister Alexander Novak announced that Russia has increased its cut by 300,000 barrels and will continue until 2023.

Additionally, both countries had shared information about the discussion between Russian President Vladimir Putin and Saudi Arabia’s Crown Prince Mohammed bin Salman after this. The Kremlin has reported that the two leaders agreed to continue cutting oil production and exports to maintain stability in the global fuel market. In addition, the Saudi spokesperson has also confirmed it.

Furthermore, the impact of Russia and Saudi’s announcement was visible on the international market. Oil prices jumped to over $90 a barrel on Tuesday. US WTI (West Texas Intermediate) crude oil price has also reached $87 per barrel. After the decision of OPEC +, due to the announcement made by Russia and Saudi Arabia, there has been a huge decline in the production and supply of oil. On the other hand, the world’s fuel demand is increasing again.

Goldman Sachs, an international financial institution, released information that the demand for crude oil in July was an average of 102.8 million barrels, which is considered the record level after 2019.

Moreover, countries like China and Japan are increasing their crude oil reserves in large quantities. Fuel demand is also growing in other Asian countries, and signs of this increase will continue till the end of the year. As a result, analysts claim that crude oil prices will jump to $100 per barrel during this period.

Meanwhile, the failure of the price cap imposed on the price of Russian fuel has come to the fore. The G7, European countries and other allies had set the maximum price of Russian crude oil at $60 per barrel. However, the Russian Ministry of Finance said Russian crude was trading at $64.37 per barrel in July and $74 per barrel in August.