Oil inventories soar after Saudi Arabia announces surprise production cut of 1 million barrels a day
- Oil inventories soared on Tuesday after Saudi Arabia announced a voluntary production cut of an additional one million barrels per day in February and March.
- Other OPEC members are not joining Saudi Arabia in production cuts and some countries are even planning to increase production.
- WTI crude jumped 5% to top $50 a barrel in Tuesday’s trading, while oil stocks like Marathon Oil and Occidental Petroleum jumped 14%.
- Watch the oil trade live here.
Oil prices soared as much as 5% on Tuesday after Saudi Arabia announced a surprise oil production cut of an additional one million barrels a day in February and March, Bloomberg reported.
WTI crude prices hit a 10-month high above $50 a barrel, and oil-related stocks like Marathon Oil and Occidental Petroleum jumped 14% in Tuesday trading.
Saudi Arabia will bear the brunt of the production cuts as other OPEC+ members do not cut or slightly increase their oil production rates. Russia and Kazakhstan will increase oil production by a combined 75,000 barrels per day in February and March.
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“We are doing this with the aim of supporting our economy, the economies of our colleagues from OPEC+ countries, to support the industry,” Saudi Energy Minister Prince Abdulaziz bin Salman told reporters on Tuesday. , according to Bloomberg.
In recent months, OPEC+ members have struggled to agree on a deal on production rates as a drop in demand due to the COVID-19 pandemic sent oil prices plummeting. The OPEC+ meeting opened Monday with Russia proposing a production increase of 500,000 barrels per day, but the move was met with opposition from most members, according to Bloomberg.
On Tuesday afternoon, the energy sector led the stock market higher, up 6% on the day.