FX.co ★ Saudis succeed in boosting oil prices rally

Saudi Arabia can celebrate one more victory. Tremendous work done by the Saudis has brought impressive results. The deal on output cuts that united most of major oil producers, including Russia, caused a spike in oil prices.

The Brent crude benchmark managed to break above the level of 60 dollars per barrel for the first time since July 2015. Orchestrated actions of the participants of the deal contributed to solving the oversupply problem. It seems that oil prices will move further upwards given the positive sentiment of oil traders. The news about a build in the US crude oil stockpiles did not cripple a rally in oil prices and the latest IEA report provided additional support to the commodity. According to the International Energy Agency, the import of crude oil from the Southeastern Asia will double by 2040, reaching 5.5 million barrels per day, as this region ramps up oil extraction in order to meet the increasing demand. Furthermore, the OPEC did not stop with its achievement. Saudi oil minister Khalid Al-Falih said that the deal on output cuts was extended until late 2018. Besides, the issue of curbing oil inventories in the industrialized countries is planned to be discussed.

Remarkably, US oil producers also benefit from the OPEC’s success as the current price levels allow them to return to the market.