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Oil Faces Supply Concerns As Prices Hit Their Highest In Nine Months
Last week, the price of two of crude oil’s leading benchmarks hit their highest levels since November 2022. This is happening due to various concerns mounting due to tight supplies of crude from Russia and Saudi Arabia after both countries are considering extending their production cuts.
According to Fox Business,
“Prices for the two leading oil benchmarks – Brent crude and U.S. West Texas Intermediate (WTI) – reached their highest levels since November 2022 last week. Brent futures rose 0.8% to settle at $90.65 on Friday, while WTI rose 0.7% to settle at $87.51 after closing higher on Wednesday.”
Last week, both benchmarks were up by 2% after there were significant gains in the week before – as Brent saw 5% gains, and WTI saw 7%. In 2023, both the benchmarks received more than 13%.
Saudi Arabia and Russia have been cutting down their oil production for some time. On Tuesday, both countries agreed to continue their production cuts by a further one million barrels per day. This will continue until the end of this calendar year.
Saudi’s state-owned press announced that the new reduction in production would bring down the output to approximately nine million barrels per day. Furthermore, they will also review their production levels every month. Saudi Arabia has been lowering its output since July and has already extended its cut twice.
Both Saudi Arabia and Russia are part of OPEC+, a group of nations that produce oil. The group coordinated their output cuts of about 3.66 million barrels per day. Janet Yellen, the Treasury Secretary of the United States, said that these steps could slow down economic growth, as she considers the production cuts to be “regrettable.”
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