Saudi Arabia, the world’s biggest oil producer, plans to reverse a recent production cut in a sign of confidence in the oil price rally, according to Wall Street Journal.
The Kingdom said last month that it would unilaterally slash 1 million barrels a day of output in February and March to support prices. Brent oil has rallied by 15% this month to reach multi-month highs in the $64.50 neighborhood.
However, advisors to the Kingdom say the output hike’s official announcement will be made when a coalition of oil producers meets next month, and the actual rise will happen in April. Also, the Kingdom may change plans if the market situation changes, advisors said.
“A Saudi increase in production…makes perfect sense given the tightness that is starting to emerge in the market,” Ole Hansen, head of the commodity strategy at London-based Saxo Bank, said, adding that the market will probably take the output hike quite well, according to WSJ.
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