Oil prices spike as Saudi Arabia, Russia extend  cut

Saudi Arabia and Russia have agreed to extend their voluntary oil production cuts through the end of this year, trimming 1.3 million barrels of crude out of the global market and boosting energy prices.

The dual announcements from Riyadh and Moscow pushed benchmark Brent crude above $90 a barrel in trading yesterday, a price unseen in the market since November.

The countries' moves could increase inflation and the cost for motorists at gasoline pumps. It also puts new pressure on Saudi Arabia's relationship with the United States, as President Joe Biden last year warned the kingdom there would be unspecified "consequences" for partnering with Russia on cuts as Moscow wages war on Ukraine. 

Saudi Arabia's announcement, carried by the state-run Saudi Press Agency, said the country still would monitor the market and could take further action if necessary.

"This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets," the Saudi Press Agency report said, citing an unnamed Energy Ministry official.

State-run Russian news agency Tass quoted Alexander Novak, Russia's deputy prime minister and former energy minister, as saying Moscow would continue its 300,000 barrel a day cut.

The decision "is aimed at strengthening the precautionary measures taken by OPEC+ countries in order to maintain stability and balance of oil markets," Novak said.

White House national security adviser Jake Sullivan declined to comment on the market impact of the decision, though he said U.S. officials had regular contact with the kingdom. He added that Biden would look to utilize "everything within his toolkit" to assist American consumers.

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