Oil surges to best week since October on Russian supply cuts

Oil posted its largest weekly gain in four months after Russia followed through on a threat to cut production in response to western energy sanctions.

Moscow says it will reduce output by half a million barrels, equivalent to about 5 per cent of January levels. The cut was the first major effect on Russian production from the swath of sanctions that have been placed on the country’s output, leading West Texas Intermediate to advance to just below US$80. 

This week’s rally also got a boost from Saudi Arabia’s decision to sell barrels at higher prices to Asian countries amid stronger demand from China as well as supply disruptions in Turkey, Norway and Kazakhstan.