Oil price leaps Russia, Saudi Arabia plan to extend supply cuts

Oil jumped after the energy ministers from Saudi Arabia and Russia said that an OPEC-led agreement to cut output should be extended until March 2018.

Saudi energy minister Khalid Al Falih and his Russian counterpart Alexander Novak discussed oil output policy in Beijing after which they made a joint statement.

Mr Falih said the next round of cuts will be on the same terms as the first curbs deal, to cut almost 1.8m barrels a day, as part of the latest effort to rebalance the global oil market.

Mr Novak said the aim of the cuts is to rebalance supply and demand. Russia is the world’s biggest oil producer, while Saudi Arabia is the biggest exporter.

Opec ministers are due at the end of this month to meet in Vienna, to discuss an extension of the cuts deal past the initial six months of 2017. This is when the final decision will be made.

Brent crude, the international benchmark, was up 1.5 per cent at $51.59 a barrel, its highest level since the start of this month. Prices gained as much as 1.7 per cent.

West Texas Intermediate gained 1.5 per cent to $48.55. Both price benchmarks were trading about 0.1 per cent higher prior to the release of the statement.