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The price of oil increased by nearly 5% on Monday morning, after an eventful G20 summit in Buenos Aires saw Russian President Vladimir Putin agree to cooperate with Saudi Arabia to curb oil production ahead of a crucial OPEC meeting on Thursday.
The news saw Brent Crude, the international benchmark for oil prices, rally above $60 a barrel and the West Texas intermediate (WTI) hit as high as $53.48.
Russia to reduce supply
At the G20 summit on Saturday, Putin declined to disclose any exact figures regarding supply cuts but reiterated that Russia would continue to work closely with Saudi Arabia and other OPEC countries to reduce production in a move that will likely strengthen oil prices.
‘Markets are expecting to see a substantial production cut after Russian President Vladimir Putin said his country’s cooperation on oil supplies with Saudi Arabia would continue,’ said Hussein Sayed, chief market strategist at brokerage FXTM.
In early-October, Brent crude hit a high of $86.29 only to witness a rapid decline as US President Donald Trump applied pressure on Saudi Arabia and other OPEC member countries to increase supply in a bid to drive down oil prices.
‘From Argentina to Alberta, the oil market news is about supply curtailments,” said Norbert Rücker, head of commodity research at Swiss bank Julius Baer. “A brightening market mood will likely extend today’s price rally in the very near term.’
US-China trade truce fuels oil rise
Oil markets welcomed another bit of good news from the G20 summit over the weekend, with China and the US agreeing to not impose any further trade tariffs on one another for at least 90 days as the two countries attempt to cooldown the ongoing trade war.
The news will likely help global markets rally slightly, with the US-China trade war that has raged in recent months taking its toll on international trade and making traders skittish with many growing increasingly worried about a large-scale economic slowdown.