Crude oil prices surged over 3% to their highest level in two weeks. after the world’s two biggest producers agreed to extend a deal on output restraint through March 2018.
The Energy Ministers of Russia and Saudi Arabia confirmed that they have reached an understanding, that is necessary to keep surplus crude of the market in order to stabilize a world oil market that is still over supplied.
The efforts of the world’s biggest exporters need to balance the world oil market setting a cap on 1.8 million barrels per day. OPEC, which produces around 30% of the world’s oil supply had already agreed in November 2016 to cut in place through June 2017.
News on the deal provided an immediate boost to oil prices, but the strategy contains a loophole because higher oil prices encourages producers in the USA, which isn’t part of the deal, to raise their output and invest in new production @ crude oil prices around $50 p/b.
Fortune / AA Magnum News 2017.