Oil prices rise as Saudi Arabia takes strong stance on supply

Oil prices ticked higher on Monday after Saudi Arabia said it would produce less than 10m barrels a day in April as it continued to throw its weight behind Opec supply cuts.

The kingdom’s state-owned oil company Saudi Aramco said its April allocations were below requests from refiners and clients.

“Despite very strong demand from international waterborne customers at more than 7.6m bpd, customers were allocated less than 7m bpd,” a company official told Reuters.

“This will keep production well below 10m bpd in April,” the official added.

The Organization of the Petroleum Exporting Countries, alongside key non-affiliated allies such as Russia, has pledged to cut supply by 1.2m bpd for six months from January. It wants to regain tighter control of market, reduce supply gluts and boost the price of crude.

The cartel next meets in Vienna on 17 and 18 April. But traders took the update by Saudi Aramco as evidence Opec’s most influential member intends to maintain a staunch position on supply.

The Saudi Arabia energy minister Khalid al-Falih has already said he believes it is too early to change Opec’s output policy. “We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” he told Reuters on Sunday.

Brent crude oil futures were ahead 1.34% as at 1400 GMT at $66.62 a barrel, while West Texas Intermediate was ahead 1.43% at $56.87 a barrel.

Brent was trading at well over $80 last October, but supply gluts - in large part thanks to a boon in US shale production - have caused prices to fall.