London’s FTSE 100 hit a fresh record high on Monday, spurred by a rally in oil prices after Saudi Arabia and Russia said that a crude production cut would be extended.
The UK’s benchmark stock index neared 7,460 points in early trading, before retreating slightly, with BP and Royal Dutch Shell two of the biggest gainers.
Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak said on Monday in Beijing that a joint-deal to cut crude supplies would be extended from the middle of this year until the end of March 2018.
"We've come to conclusion that the agreement needs to be extended," they said in a statement, adding that they would do “whatever it takes to achieve the desired goal of stabilising the market”.
In 2014, a global oil glut sent Brent tumbling from above $100 a barrel to around $50.
It slipped further throughout 2015, hitting less than $40 a barrel in early 2016 – a 13-year low – but was around 35 per cent higher during the first quarter of 2017 than during the same period of 2016, after OPEC members agreed in November to cut 1.2 million barrels a day of oil production.
On Monday, Brent crude was trading around $52 a barrel, up from below $49 earlier in May.
Over 13 per cent of the FTSE 100 is weighted towards oil and gas stocks, making it the largest sector on the index and meaning that moves in the price of crude tend to have an outsized effect on the FTSE 100 as a whole.
