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Oil prices surged in early morning trading after Saudia Arabia and other major oil producers announced a surprise cut in production. Several Gulf states on Sunday said they would decrease production by more than one million barrels per day.
The price of Brent crude oil was trading above $84 a barrel in Asia after jumping by more than $4 or 5 per cent. Analysts said higher oil prices would help fill Russian president Vladimir Putin’s coffers as his country wages war on Ukraine and force Americans and others to pay even more at the pump amid inflation fuelled in part by that conflict.
It was also likely to further strain ties with the United States, which has called on Saudi Arabia and other allies to increase production as it tries to bring prices down and squeeze Russia’s finances.
The cuts are in addition to a reduction announced last October that infuriated the Biden administration.
Saudia Arabia described the move as a "precautionary measure" aimed at stabilising the oil market. The cuts represent less than 5 per cent of the country’s average production of 11.5 million barrels per day in 2022.
