Saudi Arabia Extends Voluntary Oil Output Cut for Another Month, Possibility of Deeper Cut in the Future
Saudi Arabia has announced that it will extend its voluntary oil output cut of one million barrels per day for another month, including September, and has not ruled out the possibility of extending or deepening the cut beyond that. The kingdom’s production for September is expected to be around 9 million barrels per day, according to an official source at the energy ministry.
The additional cut is part of the precautionary efforts made by OPEC+ countries to support the stability and balance of oil markets. It follows a broad deal agreed upon by OPEC+ in June to limit supply until 2024. Saudi Arabia had initially pledged a voluntary production cut for July, which was later extended to include August.
Russia, another key player in the oil market, has also announced its own export cut of 300,000 barrels per day for September, according to Deputy Prime Minister Alexander Novak.
While OPEC+ is set to meet on Friday, sources suggest that the Joint Ministerial Monitoring Committee is unlikely to make any significant changes to oil policy during the meeting. OPEC+ has been limiting supply since late 2022 in an effort to support the market. The group, which accounts for approximately 40% of the world’s crude oil production, has been successful in driving up oil prices.
Following the Saudi announcement, oil prices rebounded, with Brent crude futures rising 42 cents to reach $83.62 a barrel. The surprise nature of the voluntary cut announcement for July had caught other OPEC+ members off guard at the June meeting, as Riyadh had not shared any details regarding the measure beforehand.
Saudi Energy Minister Prince Abdulaziz bin Salman had previously stated that OPEC+ would continue to surprise markets and do whatever is necessary to balance them.
The move by Saudi Arabia and Russia to further cut oil production indicates their commitment to supporting oil prices amid concerns about the global economic recovery.
Additional reporting by Alex Lawler in London; Editing by Jane Merriman and Jan Harvey.