Saudi Arabia, Russia to stick with 1.3 mbpd oil output cuts till end of 2023

Saudi Arabia and Russia will stick with the oil supply curbs of more than 1 million barrels a day (mbpd) to the end of the year. The production cuts first announced by the two oil majors in July have driven up prices to 10-month high levels and posed fresh inflationary pressures for the global economy.

The Organization of Petroleum Exporting Countries (OPEC) announced their oil output plans in a separate official statements on Wednesday, October 4. Saudi Arabia has slashed crude production by 1 million barrels a day, and Moscow is curbing exports by 300,000 a day, on top of earlier cuts made with the fellow OPEC nations.

Oil markets are heading in the "right direction" by balancing supply and demand, Kuwait's state news agency (KUNA) said citing the country's Oil Minister Saad Al Barrak on Wednesday, following the earlier OPEC ministerial panel which made no changes to the group's current oil output policy.

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Russian Deputy Prime Minister Alexander Novak also said that joint oil supply cuts by Saudi Arabia and Russia had helped to balance global oil markets. Speaking on the Rossiya-24 news TV station, Novak also said Russia's ban on gasoline and diesel exports had had a positive effect on the domestic fuel market.

However, crude prices have eased in more recent days, as markets worry over a slowing economy and interest rates remaining high for longer in the United States and Europe. After the announcements on Wednesday, Brent crude oil futures were down $3.30, or 3.63 per cent, to $87.62 a barrel, while US West Texas Intermediate crude (WTI) fell $3.29, or 3.69 per cent, to $85.94. 

Brent traded at its lowest since September 1 during the session, with an intraday low of $87.55 per barrel. WTI's intraday low of $85.86 was the lowest since September 5, according to news agency Reuters.

Saudi Arabia is counting on high oil prices to help fund Vision 2030, an ambitious plan by Crown Prince Mohammed bin Salman to overhaul the economy, reduce the kingdom's dependence on oil and create jobs for young people. The full 23-nation OPEC+ coalition - including OPEC nations and its allies, will hold a ministerial meeting on November 26 to review policy for 2024.