"This is a Saudi lollipop," Saudi Energy Minister Prince Abdulaziz called the Kingdom's production cuts a "Saudi lollipop" that would "ice the cake of OPEC's efforts to stabilize global crude markets.
Global oil prices surged Monday, lifting U.S. crude to the highest levels in more than a month, after members of the OPEC cartel, along with non-member allies such as Russia, agreed to extended their collective production cuts until at least the end of the year.
Saudi Arabia, the cartel's most influential member, will reduce its output by another 1 million barrels per day, starting in July, the Kingdom said following OPEC's weekend meeting in Vienna. Other OPEC members will keep their current cuts of 3.66 million barrels per day, equivalent to around 3.6% of global demand, in place until early 2024.
The group will also lower its overall production targets from January 2024 by another 1.4 million barrels per day, lead by efforts from Russia, Nigeria and Angola.
Saudi Energy Minister Prince Abdulaziz bin Salman, who warned oil speculators betting against lower prices earlier this year to "watch out", said the Kingdom would “will do whatever is necessary to bring stability to this market" and called his country's effort "a Saudi lollipop" to "ice the cake" of OPEC production cuts.
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"While the cuts once again show OPEC’s commitment to support oil prices, the impact from a similar move in April has been completely erased due to the concerns about the weakness of the global economy and its impact on demand," Saxo Bank Strategists wrote Monday. .
WTI futures for July delivery, which are tightly linked to U.S. gasoline prices, were marked $1.39 in overnight trading and changing hands at $73.13 per barrel. The contracts hit $75 per barrel, the highest since May 2, earlier in the session.
Brent contracts for August, the global pricing benchmark, traded $1.34 higher at $77.48 per barrel.
U.S. oil majors were also on the move, with shares in Exxon Mobil (XOM) rising 1.17% to $107.00 each in pre-market trading while rival Chevron (CVX) added 1.11% to $158.00 each. Occidental Petroleum (OXY) was up 1.5% at $60.56 each.