Saudi Arabia and Russia to extend oil supply cuts to August

Oil prices ticked up today after Saudi Arabia confirmed plans of extending its voluntary supply cuts to August.   

Saudi Arabia to cut oil supply by 1 million bpd

On Monday, the de-factor leader of the petroleum exporting countries said it will cut supply by one million bpd (barrels per day) for another month. According to the Kingdom’s Ministry of Energy:

This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.

Part of today’s gain in oil prices was related to Russia that also revealed plans of cutting exports by half a million barrels per day in August.

All in all, the announced cuts account for about 1.5% of the total global supply.

What does it mean for the S&P 500 index?

Today’s development creates a bit of more room for the U.S. Federal Reserve to raise rates further in an attempt to capture inflation.

Still, Tom Lee – the Founder of Fundstrat Global Advisors remains convinced that the central bank is winning the fight against inflation.

We have had a huge decline in inflation. The inflation war is one the Fed is waging and seemingly winning. So, be prepared for volatility but we have entered a buy the dip regime.

The strategist raised his year-end target on the S&P 500 today to 4,825 that suggests another 8.0% upside from here. The benchmark index is already up a whopping 16% versus the start of 2023.