Oil hits new 2016 high over rumors that Saudi Arabia, Russia have reached deal to freeze oil output
Oil touched a new 2016 high after rumors that Saudi Arabia and Russia have reached a deal to freeze oil output.
U.S. crude oil prices jumped 4.5% to $42.17 a barrel, after Russian news agency Interfax reported the deal.
Russian officials declined to comment on the news as did Qatar, which holds the rotating presidency of OPEC, the oil cartel.
The report came ahead of a crucial meeting between OPEC and non-OPEC countries in Doha on Sunday. Investors are hoping the world’s top oil producers will reach a broader deal to control the global oil supply.
Prices have tumbled over the last two years because of a major oil glut, where the world has way more oil than it can consume.
That’s because OPEC countries led by Saudi Arabia have been pumping relentlessly, determined to squeeze out higher-cost producers like the U.S. and defend their market share.
But even OPEC producers are now struggling to cope with prices this low. Oil prices collapsed to the lowest levels since 2003 earlier this year.
Saudi Arabia has cut government spending in the light of declining oil revenues. Other Gulf countries, including Kuwait, the United Arab Emirates and Qatar have also hiked taxes and slashed their budgets.
