Brent crude is a major trading classification of crude oil originating from the North Sea. It serves as a global benchmark for oil prices and is used to price two-thirds of the world's oil.

What are supply cuts?

Supply cuts refer to the reduction in the production of oil by countries or organizations, aimed at controlling prices and managing market supply.

What is backwardation?

Backwardation is a market condition where the current price of a commodity is higher than the prices trading in the future, indicating tight supply for immediate delivery.

What is WTI crude oil?

West Texas Intermediate (WTI) is a grade of crude oil used as a benchmark in oil pricing. It is known for its high quality and low sulfur content.

What is a market deficit?

A market deficit occurs when the demand for a commodity exceeds its supply, potentially leading to price increases.

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Oil prices hit 10-month high as Saudi, Russia extend supply cuts

Published by Jessica Weisman-Pitts

Posted on September 5, 2023

2 min read

Last updated: January 31, 2026

Oil pump jacks silhouetted at sunset, symbolizing rising oil prices - Global Banking & Finance Review — This image showcases oil pump jacks operating at sunset, reflecting the recent surge in oil prices following supply cuts by Saudi Arabia and Russia. The visual represents the dynamics of the global oil market.

Oil prices hit 10-month high as Saudi, Russia extend supply cuts

By Shariq Khan

BENGALURU (Reuters) -Oil prices surged 2% on Tuesday to their highest since November, after Saudi Arabia and Russia extended their voluntary supply cuts by three months to the end of this year, worrying investors about potential shortages during peak winter demand.

Brent crude futures rose by $2.08, or about 2.3%, to $91.08 a barrel by 11:43 a.m. EDT (1543 GMT), eclipsing the $91 level for the first time since last November.

Meanwhile, U.S. West Texas Intermediate crude (WTI) October futures rose $2.42, or about 2.8%, to $87.97 a barrel, also a 10-month high.

Investors had expected Saudi Arabia and Russia to extend voluntary cuts into October, but the three-month extension was unexpected

“It would appear they’re trying to double down and capitalize on the recent price moves. Put a big buffer in place for when the cuts end,” OANDA analyst Craig Erlam told Reuters.

Both countries said they would review the supply cuts monthly, and could modify them depending on market conditions.

“With the production cut extended, we anticipate a market deficit of more than 1.5 million bpd in 4Q23. So, with oil inventories set to fall further over the coming months, we expect Brent to rise to $95/bbl (barrel) by year-end,” UBS analyst Giovanni Staunovo wrote in a note to clients.

Also supporting oil prices on Tuesday, Goldman Sachs said it now sees the probability of a U.S. recession starting in the next 12 months at 15%, down from an earlier forecast of 20%. Prospects of the U.S. economy avoiding a hard recession have helped lift oil demand and prices in recent months.

Brent futures, which are used to price over three-quarters of the world’s traded oil, have gained by about 26% since late June, after Riyadh first announced its voluntary cuts.

The premium of the front month Brent contract to the six-month contract rose to more than $4 a barrel on Tuesday, the highest since November 2022. This structure, called backwardation, indicates tightening supply for prompt delivery.

(Reporting by Natalie Grover in London, Katya Golubkova in Tokyo and Andrew Hayley in Beijing; Editing by Andrea Ricci)

Oil prices hit 10-month high as Saudi, Russia extend supply cuts

Oil prices hit 10-month high as Saudi, Russia extend supply cuts

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