Crude oil price on the Brent benchmark has jumped higher on the day as reports from Reuters seem to suggest that a deal to deepen oil production cuts has been reached between Russia and Saudi Arabia. The report, which cites to insider sources close to the situation, says that production cuts could be as deep as 20 million barrels of crude oil per day. However, the quotas assigned to every member of the OPEC + bloc remains unknown.
“Russia and Saudi Arabia have managed to remove their main obstacles to agreeing on a new deal on oil cuts,” a senior Russian source was quoted as having told Reuters.
The initial market reaction saw a spike on crude oil price on the Brent benchmark by at least 4.67% initially. Brent crude currently trades at $34.62, slightly off intraday highs that were recorded at $36.36 earlier in the day.
Crude oil price on the Brent benchmark is currently challenging the resistance level at 35.61, having touched this price level earlier in the week without being able to break it. A break above this price level allows crude oil price to target 38.56 (28 March 2016 low acting in role reversal), which corresponds to a previous high seen on March 11. This price is the highest that crude oil price has ever been since the world woke up to a 30% downside gap at the start of the price war. 41.43 and 44.16 (19 June 2017 lows) are further resistance levels that could become relevant if the markets respond to any confirmed production cut deals.
On the flip side, if crude oil price fails to get a lift from the latest news, it could retreat from the current price levels to retest the 31.92 or 28.38, depending on how strong a resumption of a possible selloff is.