Saudi to implement significant production cuts in July, oil markets gain momentum
Saudi Arabia to cut its oil production by 1 million b/d in July, bringing it to 9 million b/d, said the country’s Energy Minister Prince Abdulaziz at the highly anticipated OPEC+ meeting on Sunday.
PHOTO- Oil barrels and a pump jack against the OPEC flag. Getty Images
OPEC and its allies decided to extend voluntary cuts into 2024, after a seven-hour long meeting on Sunday, to boost falling oil prices.
OPEC+, which includes OPEC members and allied producing countries such as Russia, agreed to reduce total production targets from January 2024 by another 1.4 million b/d. The new production targets for 2024 stand at 40.46 million b/d, OPEC said in a statement after the meeting.
The group of countries has cut oil production of 3.66 million b/d since 2022, including voluntary cuts of around 1.66 million b/d in April 2023, Reuters reports.
Meanwhile, the group’s largest oil producer, Saudi Arabia, has committed to “implement an additional voluntary cut” of 1 million b/d in July, according to the country's state-owned media agency. The move could be extended beyond July, Saudi Press Agency has reported citing an official source in the Ministry of Energy.
Oil prices have increased in reaction to this news. The front-month ICE Brent contract has risen to $77/bbl on Monday at 4.44 GMT, after settling at $76.13/bbl on Friday.
Saudi Energy Minister Prince Abdulaziz has described the country's additional output cut as a “Saudi lollipop”. “We wanted to ice the cake. We always want to add suspense. We don't want people to try to predict what we do. This market needs stabilisation,” CNBC has reported quoting the minister from a press briefing.
The alliance also decided to lower targets for Russia, Angola, and Nigeria in order to align them with the group’s existing output levels. Russia will extend its 500,000 b/d oil output cut through the end of 2024, its official media agency TASS said, citing its Deputy Prime Minister Alexander Novak.
Meanwhile, the group has allowed the UAE to increase its output by 200,000 b/d in 2024 to 3.22 million b/d.
By Aparupa Mazumder
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