Saudi Arabia, the world's largest oil exporter, will extend its voluntary oil production cut of one million barrels per day until next month.
"Saudi Arabia will extend the voluntary cut of one million barrels per day ... for another month to include the month of September," the Saudi Press Agency reported on Thursday, citing an official source from the Ministry of Energy.
The production cut is in addition to the voluntary reduction previously announced by the kingdom in April, which will stay in effect until December 2024, the Energy Ministry said.
The cut, which first took effect in July, could be further "extended and deepened" and is aimed at supporting the stability and balance of oil markets, the ministry added.
At an Opec seminar last month, the Saudi Energy Minister said the group would continue pursuing efforts to stabilise the oil market by doing “whatever is necessary”.
Prince Abdulaziz bin Salman said the market would not be left “unattended” and the output policy announced on June 4 was “too big for people to comprehend”.
Opec is unlikely to make any changes to its output policy when it meets on Friday.
At the June 4 meeting, the group agreed to keep its current production curbs of 3.66 million bpd in place until the end of the year.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.79 per cent higher at $83.86 a barrel at 5.53pm UAE time on Thursday. West Texas Intermediate, the gauge that tracks US crude, was up 0.93 per cent at $80.23 per barrel.
Futures were down earlier in the day amid concerns over a US credit rating downgrade and a strong dollar.
Oil prices recorded their biggest monthly gain since early 2022 last month amid falling crude inventories and Opec supply cuts, as cooling inflation eases concerns of aggressive interest rate increases by central banks.
Last week, the International Monetary Fund marginally raised its forecast for the global economy for this year and the next but said it was “not out of the woods” due to headwinds that persist, even though the recovery is on track.
The fund revised its earlier forecast for this year upwards, raising it by 0.2 percentage points to 3 per cent, although lower than the 3.5 per cent expansion recorded in 2022. It is projecting a similar pace of growth in 2024.
Goldman Sachs has reaffirmed its Brent forecast of $86 a barrel by December and expects prices to rise to $93 in the second quarter of 2024. The investment bank also raised its 2023 oil demand estimate by 550,000 bpd.
Swiss lender UBS expects Brent to trade in the range of $85 to $90 a barrel over the coming months and has attributed the recent rise in prices to Opec’s voluntary output cuts and production interruptions in Mexico, Nigeria and Libya.
Oil demand is projected to breach 103 million bpd in August, driven by higher consumption in China and India, according to the bank.