Oil Soars To New 2023 High After Saudis, Russia Shock With Extended, Expanded Production Cut

Just days after we said that Saudi Aramco floating to sell up to $50 billion in new stock meant that oil is about to soar much higher...

... moments ago oil exploded higher after first Saudi Arabia and moments later Russia surprised markets by announcing that the recently implemented production cuts would be extended through year-end, well beyond the 1 month that was widely expected by the market.

Just after 9am ET, Saudi Arabia said it would extend the voluntary cut of 1 million b/d of for another 3 months, from October until the end of December, well beyond the expectation of just 1 more month. Saudi press agency SPA notes that the voluntary cut decision will be reviewed monthly to consider deepening the cut or increasing production. The extension of cuts is meant to reinforce the precautionary efforts made by OPEO countries with the aim of supporting the stability of the oil market.

And then, literally seconds after the Saudi decision, Russian deputy PM Novak said Russia would not only extend its reduction of oil exports until the end of the year, but also add another 300kb/d in voluntary oil cuts until December 2023. The measure is in addition to voluntary reduction previously announced by Russia in April 2023, which will last until of December 2024.

Similar to the Saudis, Russia said that the decision to reduce oil production to be reviewed monthly to consider possibility of deepening reduction or increasing production depending on situation on the world market.

Following this announcement Brent Nov’23 lifted from USD 88.50 to above $90 for the first time in 2023, while WTI Oct’23 rose from USD 85.55/bbl to USD 87.00/bbl, also the highest price of the year, and about to crush the Fed's hopes for a decline in headline inflation.

Bottom line: we now know that a year and a half later, the OPEC+/BRIC+ reaction to Biden's weaponized dollar is weaponized oil; may the least hopeless man win.

As for Biden, we wish him the best of luck refilling the SPR now that oil is about to hit $100 and rise above the price where the senile president sold most of the US strategic oil.