The Brent benchmark rose from around $57 per barrel to over $58 per barrel in early Tuesday's trading, reaching the highest level since July 2015. WTI crude went past the $54 per barrel and $55 per barrels marks before hovering at just below $55 per barrel after an almost 2.3-percent rally. The North American benchmark also hit the highest levels since July, Sputnik International reported.
Brent crude March 2017 futures were up almost 2.2 percent and stood at over $58 per barrel, while WTI February 2017 futures rose a similar amount to around $54.90 per barrel. The rally comes as the Organization of the Petroleum Exporting Countries (OPEC) member states and 11 major non-cartel oil producing countries, including Russia and Mexico, begin to curb output in an effort to stabilize the oil market. The production cuts, agreed on in late November by OPEC and finalized in December by several major non-cartel producers, kicked in on January 1. OPEC members promised to abide on a voluntary basis by the production ceiling of 32.5 million barrels per day, which was preliminary agreed in Algiers in September. This is a 1.2-million barrel per day production cut. Russia agreed to cut its production by 300,000 barrels a day, while Mexico, Azerbaijan and Kazakhstan are reducing oil output by 100,000, 35,000 and 20,000 barrels per day respectively. The collective non-OPEC pledge is a 558,000 barrels per day cut.
The measure, which was under discussion for over a year before implemented, is expected to curtail the glut in global oil supply and bring oil prices to the level of $55-60 per barrel in 2017, compared with 2016 average of $34 dollars per barrel.
Oil market turbulence caused oil prices to plunge from $115 per barrel in June 2014 to less than $30 per barrel in January 2016, causing hardship for oil exporters. Prices have partially recovered and hovered at around $50-55 per barrel before Tuesday's rally.