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Oil prices rallied 2 percent early on Tuesday after OPEC’s largest producer and de facto leader Saudi Arabia signaled even deeper cuts in production and exports of the Kingdom for March.
At 07:30 a.m. EST on Tuesday, WTI Crude was trading up 1.87 percent at $53.39, while Brent Crude was rallying 2.21 percent at $62.87.
In an interview with the Financial Times published on Tuesday, Saudi Arabia’s Energy Minister Khalid al-Falih said that the Saudis would cut production to around 9.8 million bpd in March, some 500,000 bpd below the commitment in the OPEC+ deal that began in January.
Under the OPEC/non-OPEC deal for a total of 1.2 million bpd cuts between January and June, Saudi Arabia’s share is a cut of 322,000 bpd from the October level of 10.633 million, to reduce output to 10.311 million bpd.
At the end of January, al-Falih said that Saudi Arabia’s February crude oil production would likely be close to 10.1 million bpd, down from around 10.2 million bpd for January. Since December, Saudi Arabia has cut close to 1 million bpd in production and exports, and this “will trickle down the markets over the next few weeks,” al-Falih told Bloomberg Television in an interview at the end of last month.
In his most recent interview, with the FT, the energy minister of OPEC’s largest producer and top global oil exporter also said that Saudi Arabia would be cutting its crude oil exports to near 6.9 million bpd next month, slashed from 8.2 million bpd just three months ago.
Market participants continue to weigh supply-side factors such as tighter supply from OPEC and its Russia-led non-OPEC allies against rising U.S. crude oil production, U.S. sanctions on Venezuela and the battle over Libya’s largest oil field Sharara, which has been shut in for more than two months now.
Equity, bond, and oil markets are also closely monitoring the U.S.-China trade talks for clues whether a deal can be hammered out before the March 1 deadline of the ‘trade war truce’.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.