Crude oil prices surge as optimism grows for production cut extension

The prices of oil in the international market witnessed a surge on Wednesday, with Brent, Nigeria’s flagship crude grade rising to $40 over continued optimism that major producers will extend production cuts.

Brent is reaching the $40 mark for the first time since March amidst heightened belief that there would be renewed demands for product as the world begins a gradual recovery from the COVID-19 pandemic.

Brent crude futures for August rose 43 cents, or 1.1 per cent, at $40 a barrel, by 0252 GMT.

Similarly, the U.S. West Texas Intermediate (WTI) crude futures gained 68 cents, or 1.9 per cent, at $37.49 a barrel, rising as much as $37.88, which is also the highest since March 6.

The rise in the prices is coming on the heels of hopes that the Organisation of the Petroleum Exporting Countries (OPEC) and other major producers including Russia and its allies, known as OPEC+, may extend production cuts of 9.7 million barrels per day (bpd), or about 10 per cent of global output, into July or August.