LONDON: Oil prices jumped on Thursday after Saudi Arabia extended its voluntary one million barrel per day output cut by another month to the end of September.
In June, OPEC+ - the Organization of the Petroleum Exporting Countries and allies - agreed on a broad deal to limit oil supply into 2024, and Saudi Arabia pledged an additional voluntary cut for July.
Early last month, Saudi Arabia said it would extend the cut for another month to include August. It had been widely expected to extend the reduction through September.
Russia will also cut oil exports by 300,000 bpd in September, Deputy Prime Minister Alexander Novak said shortly after the Saudi announcement.
Brent crude futures were up 76 cents to $83.96 a barrel by 1350 GMT on Thursday, while U.S. West Texas Intermediate crude was 83 cents higher at $80.32.
Both benchmarks rose by more than $1 earlier in the session.
Oil prices hit three-month highs on Wednesday, as tighter supplies and rising demand outweighed concern that interest rate hikes and stubborn inflation could deter economic growth.
The Bank of England on Thursday raised interest rates to a 15-year high of 5.25% from 5% on Thursday to try to tame inflation.
Investor risk appetite took a hit on Wednesday when ratings agency Fitch downgraded the main U.S. credit rating, reflecting an expected fiscal deterioration as well as a high and growing government debt burden. The downgrade pushed oil and global stock markets lower.
Following on from Thursday’s output news, OPEC+ ministers will on Friday meet to review the market.