Oil prices and related stocks were climbing Tuesday after Saudi Arabia said it would cut output by an extra 1 million barrels a day from next month, while most of the OPEC+ alliance agreed to hold output steady,
The move had oil-industry stocks rising. Marathon Oil (MRO) - Get Report at last check was up 11%, Apache (APA) - Get Report was rising 12%, and Occidental Petroleum (OXY) - Get Report also was up 12%.
The OPEC+ agreement will see the alliance cut 7.125 million barrels a day in February and 7.05 million barrels a day in March, Bloomberg reported, citing a draft communique.
The kingdom will make an extra cut of 1 million barrels a day, said Saudi Energy Minister Prince Abdulaziz bin Salman.
That more than offsets the combined 75,000 barrel-a-day increase Russia and Kazakhstan will be allowed to make in each of those months, Bloomberg reported. The rest of the group will hold output steady.
After two days of talks OPEC+ reached an agreement to curb supply over the next two months, with Saudi Arabia carrying much of the extra burden of the cuts.
Saudi Arabia’s unilateral cut is “a groundbreaking statement that shows the oil giant is not only ready to bite the bullet and keep taps tight, but it also recognizes the short-term demand risk and is ready to protect its export prices by tightening supply,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, told Bloomberg.
In the U.S., crude inventories are expected to fall this week following three straight weeks of declines, according to a Bloomberg survey. The industry-funded American Petroleum Institute reports its figures later Tuesday ahead of U.S. government data on Wednesday.