Saudi stocks rise on OPEC decision to cut output

Saudi Arabia’s Tadawul All Share Index (TASI) jumped 1.5 percent within minutes of opening on Thursday, a day after OPEC decided for the first time in eight years to cut its oil output.

The oil-sensitive petrochemicals sector jumped 3.3 percent as blue chip Saudi Basic Industries Corp (SABIC) soared 3.8 percent to SAR 98.

Brent crude futures have surged nearly 9 percent. The global benchmark grade was last trading above the $50-mark at $50.47 per barrel (bbl).

After its meeting on Wednesday, the oil cartel agreed to slash output by 1.2 million barrels per day (bpd), setting a ceiling of 32.5 million bpd for its members.

Indonesia, a net importer, could not participate in the deal and has chosen a suspension from the group, Mohammed Bin Saleh Al-Sada, OPEC president and Qatar’s minister of energy, told reporters after the ministerial meeting in Vienna on Wednesday.

Saudi Arabia will take the “biggest” cut of 486,000 bpd, Al-Sada said.

The agreement remains contingent on non-OPEC producers reducing output by 600,000 bpd, he said, adding that the cartel has received assurances from non-members on the cut.

“The Russian Federation has already committed to reduce 300,000 bpd. Other countries have also showed commitment and we will call for a meeting to finalize this element,” Al-Sada added.

OPEC has set up a three-member ministerial committee with Kuwait as the chair to monitor the progress of the deal.

The agreement will come into effect starting January and will be reviewed again after six months.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com