Oil stocks soar after Saudi Arabia announces surprise production cut of 1 million barrels per day

• Oil stocks soared on Tuesday after Saudi Arabia announced a voluntary production cut of an extra 1 million barrels per day throughout February and March.
• Other OPEC members are not joining Saudi Arabia in the production cuts and some countries are even planning to boost output.
• WTI Crude jumped as much as 5% to above $50 per barrel in Tuesday trades, while oil stocks like Marathon Oil and Occidental Petroleum surged as much as 14%.
• Watch oil trade live here.

Oil prices soared as much as 5% on Tuesday after Saudi Arabia announced a surprise oil production cut of an extra 1 million barrels per day throughout February and March, Bloomberg reported.

WTI Crude prices jumped to a 10-month high, above $50 per barrel, and oil-related stocks like Marathon Oil and Occidental Petroleum jumped as much as 14% in Tuesday trades.

Saudi Arabia will take the brunt of the production cuts as other OPEC+ members either don't cut or slightly increase their oil production rates. Russia and Kazakhstan will increased their oil output by a combined 75,000 barrels per day in February and March.

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"We do that with the purpose of supporting our economy, the economies of our colleagues in OPEC+ countries, to support the industry," Saudi Energy Minister Prince Abdulaziz bin Salman told reporters on Tuesday, according to Bloomberg.

In recent months, OPEC+ members have struggled to agree to a deal on production rates, as a drop in demand due to the COVID-19 pandemic put a dent in oil prices. The OPEC+ meeting opened on Monday with Russia proposing a production hike of 500,000 barrels per day, but that measure was opposed by most members, according to Bloomberg.

As of Tuesday afternoon, the Energy sector led the stock market higher, up 6% on the day.