Oil rose toward $43 a barrel in London after OPEC and its allies agreed to extend historic output curbs by an extra month. Brent futures added as much as 2.6% and are heading for their longest run of gains since February. The extension is a victory for Saudi Arabia and Russia, which were deadlocked in a brutal price war just two months ago. OPEC+’s de-facto leaders showed their commitment to shore up oil markets globally, and even cajoled Iraq, Nigeria and other laggards to fulfill their promises to reduce production.
Following the new deal, Saudi Arabia pressed on by increasing some crude prices by the most in at least two decades. The hikes erased almost all of the discounts the kingdom made during its brief price war with Russia, with the steepest increases hitting July exports to Asia.
The supply cuts and a rebound in demand have helped oil prices double since April. China’s crude oil imports surged to a record high last month, while consumption in other major consumers such as India is improving. Still, a sustained rebound in prices may be hampered by deteriorating relations between Washington and Beijing, a second wave of infections, or returning U.S. shale supply.