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 a 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 per 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 on Monday with Russia proposing a production increase of 500,000 barrels per day, but the move was opposed by most members, according to Bloomberg.
On Tuesday afternoon, the energy sector led the stock market higher, up 6% on the day.