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Oil Prices Rally in Response to Production Cut Extension in Saudi Arabia

Crude oil prices were in rally mode on Thursday after Saudi Arabia announced a decision to extend previously announced production cuts by a month. Saudi Arabia pointed to market stability in justifying the move. File photo by John Angelillo/UPI
Crude oil prices were in rally mode on Thursday after Saudi Arabia announced a decision to extend previously announced production cuts by a month. Saudi Arabia pointed to market stability in justifying the move. File photo by John Angelillo/UPI

The Ministry of Energy in the Saudi government said Thursday it would extend a voluntary production cut of 1 million barrels per day to September, sources told the official news agency.

The Saudi Press Agency referenced an “official source” in the ministry in confirming the decision to extend cuts implemented in July by another month.

“The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” the report added.

OPEC+ refers to the core group of the Organization of the Petroleum Exporting Countries and non-member state allies, such as Russia. Saudi Arabia is the de facto leader of the group and it needs oil priced above $80 per barrel to balance its books.

The price for Brent crude oil, the global benchmark, passed the $80 mark July 21 and has been rallying since. Brent was trading around 0.8% higher on the day as of 10:30 a.m. EDT to move within a few cents of $85 per barrel.

Related Story: White House Admits Asking Saudis to Postpone Oil Cuts Until After Midterms

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