Crude surges as Russia & Saudi Arabia back supply cuts extension
North Sea Brent crude gained $1.25 or 2.46 percent to $52.06 per barrel, while US West Texas Intermediate was up by $1.21 or 2.53 percent to $49.05.
Saudi Energy Minister Khalid al-Falih and his Russian counterpart Aleksandr Novak met on Monday in Beijing to announce crude supplies would be cut at least until March next year.
"We've come to the conclusion that the agreement needs to be extended," the statement said.
"The two ministers agreed to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5-year average level," it added.
Russian President Vladimir Putin, who is also in Beijing, said the decision to extend output curbs was right.
"I have met with the heads of the companies... and we support the proposal," said Putin, who said it was right Russia was itself choosing how to approach the issue.
Before the announcement, the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers agreed to curb production by 1.8 million barrels per day (bpd) for six months from January 1 to support the market and push prices to $60 per barrel.
"Saudi and Russia are clearly working closely together. Saudi seems very determined to push oil prices higher by making this joint statement now," said Oystein Berentsen, managing director for oil trading company Strong Petroleum in Singapore, as quoted by Reuters.
OPEC meets on May 25 in Vienna to discuss the cuts.
However, efforts by Moscow and Riyadh have been undermined by rising US shale oil production, which didn’t join the agreement.
"With the US rig count increasing for its 17th consecutive week, I think we can safely say the crude oil battle is well and truly on," Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai told Reuters.