Oil price rises as Russia and Saudi Arabia decide to extend production reduction agreement

Russia and Saudi Arabia have announced their intention to extend their agreement on reducing oil production through until March 2018, reported news agency Interfax on Monday, citing a joint statement by Russia’s Energy Minister Alexander Novak and Saudi Arabia’s Energy Minister Khalid Al-Falih following their meeting in Beijing.

Novak and Al-Falih also stressed that the agreement on reducing oil production is open to new participants. Twenty-four countries have signed on so far.

Stock exchanges have reacted to the decision, with the price of a barrel of Brent oil increasing by 2.6 percent to $52.2 on American exchange and marketplace operator International Exchange.

The members the Organization of the Petroleum Exporting Countries (OPEC) and 11 non-member countries, including Russia, agreed to reduce oil production in early December 2016. The agreement provided for a reduction in oil production by 1.8 million barrels per day in the first half of 2017.

The main goal of the agreement is to stabilize world oil prices by reducing world oil reserves to that of the average of the past five years.