OPEC: Saudis unveil extra 1 million barrel cut per day starting July
Saudi Arabia Sunday said it will make an additional voluntary cut of 1 million barrels of oil per day starting July to support the sagging cost of crude. The rest of the OPEC producers agreed to extend earlier production cuts through the end of 2024
PremiumSaudi Arabia Sunday said it will make an additional voluntary cut of 1 million barrels of oil per day starting July to support the sagging cost of crude. The rest of the OPEC producers agreed to extend earlier production cuts through the end of 2024.
Unveiling the unilateral cut, Saudi Energy Minister Prince Abdulaziz bin Salman said, “This is a grand day for us, because the quality of the agreement is unprecedented," adding that the new production targets are “much more transparent and much more fair."
The Saudi energy minister further said the cut could be extended and that the group “will do whatever is necessary to bring stability to this market."
The Saudis felt the cut was necessary underlines the uncertain outlook for demand for fuel in the months ahead. There are concerns about economic weakness in the US and Europe, while China’s rebound from COVID-19 restrictions has been less robust than many had hoped.
Prior to the Saudi production cut announcement, OPEC--which groups the Organization of the Petroleum Exporting Countries and allies led by Russia--reached a deal on output policy after seven hours of talks and decided to reduce overall production targets from 2024 by a further total of 1.4 million barrels per day.
Many of these reductions will not be real as the group lowered the targets for Russia, Nigeria and Angola to bring them into line with their actual current production levels. The group even allowed, the United Arab Emirates to raise output.
International benchmark brent crude climbed as high as $87 per barrel but has given up its post-cut gains and been loitering below $75 per barrel in recent days. US crude has dipped below $70.
The oil production cut follows bin Salman’s sharp warning to speculators betting on lower oil prices. The Saudis need sustained high oil revenue to fund ambitious development projects aimed at diversifying the country’s economy away from oil.
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