DUBAI, United Arab Emirates — Saudi Arabia and Russia agreed to extend their oil production cuts through the end of this year, trimming 1.3 million barrels of crude daily 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 Tuesday, 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 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.
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.
Benchmark Brent crude traded Tuesday above $90 a barrel after the announcement. Brent had largely hovered between $75 and $85 a barrel since last October. A barrel of West Texas Intermediate, a benchmark for America, traded over $87 a barrel.
The White House did not immediately respond to a request for comment, though Biden and U.S. lawmakers have criticized Saudi Arabia and Russia over their past production decisions.
Bob McNally, the founder and president of the Washington-based Rapidan Energy Group and a former White House energy adviser, said Saudi Arabia and Russia had “demonstrated their unity and resolve to proactively manage” the risk of oil prices potentially dropping in tougher economic conditions..
“Barring a sharp economic downturn, these supply cuts will drive deep deficits into global oil balances and should propel crude oil prices well above $90 per barrel,” McNally said.
The average gallon of regular unleaded gasoline in the U.S. stands at $3.81, according to AAA, just under the all-time high for Labor Day of $3.83 in 2012. The price in Massachusetts is running 7 cents below the national average at $3.74 a gallon, according to the most recent survey.
Gasoline demand typically drops for U.S. motorists after the holiday so it remains unclear what immediate effect this could have on the American market, AAA spokesman Andrew Gross said.
“I’m more concerned about what the rest of hurricane season may hold,” Gross said. “A big storm along the Gulf coast could move prices dramatically here.”
Hurricane Idalia just plowed through Florida and U.S. forecasters said Tuesday that a new tropical depression in the Atlantic Ocean could become a “major hurricane.”