Muscat – The price of the Oman crude oil contract rose above $90 per barrel for the first time since November 2022 on Wednesday, as Saudi Arabia and Russia announced a day earlier that they were extending their respective production and export cuts.

The official selling price of Oman crude (for November delivery) jumped 1.3% to reach $90.41 per barrel at the Dubai Mercantile Exchange (DME) on Wednesday, following a 1.4% rise in the international benchmark Brent crude and a 1.9% increase in the US benchmark Western Texas Intermediate (WTI) the previous day.

However, Brent and WTI crude prices slightly decreased on Wednesday after rising sharply in the previous session, with Brent trading at $89.6 a barrel by 0740 GMT.

The monthly average price of Oman crude for September delivery arrived at $80.54 per barrel, an increase of $5.76 per barrel compared to the price for August delivery, according to a DME statement.

On Tuesday, Saudi Arabia and Russia announced that they would extend voluntary oil cuts until the end of the year, sending the price of Brent crude to a 10-month high.

The Saudi production cut of one million barrels per day, which first took effect in July, will continue “for another three months until the end of December 2023,” the kingdom’s energy ministry said in a statement.

Russia said it would extend its oil export cuts of 300,000 barrels per day until the end of the year.

“This was flagged last week to some extent, but crude is fetching strong bids on the announcement,” said Finalto analyst Neil Wilson.

Saudi Arabia, the world’s biggest crude exporter, first announced its cut after a June meeting of the 23-nation OPEC+ alliance, which also includes Russia and Oman.

A statement in early August revealing the cut would last through September included a warning that it could be “deepened,” but Tuesday’s announcement has kept it at the same level for now.

The unilateral Saudi cut followed a decision in April by several OPEC+ members to slash production voluntarily by more than one million barrels per day—a surprise move that briefly buttressed prices but failed to bring about a lasting recovery.

In coordination with countries participating in the OPEC+ agreement, Oman in April announced a voluntarily production cut of 40,000 barrels of crude oil per day, starting from May until the end of 2023. In June, the Ministry of Energy and Minerals announced to extend Oman’s voluntary cut of 40,000 barrels of oil per day until the end of December 2024.

Justin Alexander, director of the consultancy Khalij Economics, said, “The additional cuts [by Saudi Arabia] do appear to have boosted prices, and the supply is looking tight in the fourth quarter despite rising output from Iran and some other countries.

“However, the effort has come at a cost to the kingdom, with the reduction of its supply by 10% (on top of the 10% in cuts coming from the October and April OPEC+ meetings).”

Saudi daily production is at approximately 9mn barrels per day, far below its reported daily capacity of 12mn barrels per day.

(With inputs from AFP)