2023-07-03 13:57:06
Saudi Arabia announced on Monday (July 3) that it was extending its oil production cut by one million barrels per day to support falling oil prices. The reduction, which took effect in July, will continue in August and “may be extended” beyond that period, the kingdom’s news agency said, citing a source at the energy ministry.
“The source confirmed that this additional voluntary reduction reinforces the precautionary measures taken by the OPEC+ countries [Organisation des pays exportateurs de pétrole] with the aim of supporting the stability and balance of the oil markets”, the news agency added. This decision maintains the production of the rich oil kingdom at around 9 million barrels a day. Announcing the cut last month following the meeting of oil producers, Saudi Arabia’s energy minister, Prince Abdulaziz Bin Salman, said it was potentially « extensible ».
Moscow intends, for its part, to reduce its exports by 500,000 barrels per day, assured the Deputy Prime Minister, Alexander Novak, quoted by the Russian press agencies. “It’s important for oil prices as the door is open for more declines in the coming months”explained to Agence France-Presse (AFP) Bjarne Schieldrop, an analyst at SEB.
Read also: Article reserved for our subscribers Global oil demand is heading for a record in 2023
No sustained price increase yet
In April, several OPEC+ members decided to voluntarily cut production by more than a million barrels per day. This surprise decision had briefly supported prices, but did not lead to a lasting rise. Oil producers are facing falling prices and high market volatility, lingering fallout from Russia’s invasion of Ukraine and China’s faltering economic recovery.
In the first half, Brent and WTI fell around 12%, weighed down by Chinese demand which is struggling to recover after the long confinements due to Covid-19 and by fears of a recession in the United States. “Global growth concerns dominate the market” and prevent black gold prices from taking off, say ANZ analysts. But according to them, “OPEC+ production cuts are not yet fully felt” and when they are, prices should take off.
Read the column: Article reserved for our subscribers Oil prices: “The loneliness of the princes of OPEC”
Saudi Arabia, the world’s largest oil exporter, is counting on higher oil prices to fund an ambitious reform program that could shift its economy away from fossil fuels. Analysts say the kingdom needs an oil price of $80 a barrel to balance its budget, well above the averages recorded in recent years.
#Saudi #Arabia #extends #production #cut #attempt #support #prices