Oil prices jumped to their highest in almost a year and a half on Monday after Saudi Arabia said it may cut its output even more than it had suggested at last week’s OPEC meeting.
That added to the boost from the weekend agreement by producers from outside OPEC, including Russia, to pump less next year.
But industry watchers remain cautious. Chris Beauchamp, Senior Analyst with IG said: “It could mark a sea change in the oil market going into 2017. It’s definitely one to watch I think. But as ever with these OPEC and non-OPEC nations, the proof of the pudding is in the eating, so let’s not get our party hats on too soon.”
At a meeting on Saturday, 11 non-OPEC countries pledged to reduce output by 558,000 barrels per day (bpd) next year – with Russia responsible for more than half of that cut. Major producers including the US, China, Canada and Brazil were not included.
The unprecedented deal is supposed to reduce the glut of crude which has been depressing prices, and indeed on Monday oil was 50 percent higher than at this time last year.