Brent prices, the global benchmark, jumped up around $5 to around $85 a barrel immediately on news of the cuts.
Because the cuts are planned to last from May through the end of the year, the effect on oil prices is also expected to be prolonged.
For the record, Saudi Arabia said the cuts were a"precautionary measure aimed at supporting the stability of the oil market." The kingdom consistently denies that production decisions are made with a specific price target in mind. That's what happened last year when oil prices surged, sending the national average price for gasoline to a record of as much as $5 per gallon.It's hard to predict exactly how much prices will rise now, because there are other factors at play, including refinery outages, changes in demand and general economic conditions.Saudi Arabia and the U.S. have long been allies.
Analysts at RBC Capital Markets, who have traveled to Riyadh several times in recent months, wrote that the Kingdom of Saudi Arabia now sees the U.S. as"just one of several partners," while the relationship with China grows more important.
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