Key Insights
- Saudi Arabia has extended a voluntary cut in oil production by 1 million barrels per day to September.
- Thus, next month the kingdom will produce about 9 million barrels of oil per day, this is the minimum level for several years.
- At the same time, Riyadh may extend the decision to reduce production further, as well as further reduce the volume of oil produced.
Saudi Arabia has extended a voluntary cut in oil production by 1 million barrels per day until September, the Saudi Press Agency news agency reported, citing an official source in the country’s Ministry of Energy.
Thus, in September the country will produce about 9 million barrels of oil per day, this is the minimum level for several years. Saudi Arabia may extend the decision to reduce production further, as well as further reduce the volume of oil produced, the report said.
The goal of the production cuts is to “strengthen the precautionary measures taken by the OPEC+ countries in order to maintain stability and balance in the oil markets,” the source said.
Oil production by OPEC countries fell at the sharpest pace in three years thanks to the actions of Saudi Arabia, Bloomberg reported on August 1, citing its calculations.
The cartel countries in July produced an average of 27.79 million barrels per day, this is the minimum since the covid 2020.
Read also: Brent Oil Prices Unlikely to Fall Below $70, Citigroup Predicts
Saudi Arabia and Russia announced plans to voluntarily cut oil production and supplies, respectively, on July 3. Riyadh decided to reduce production by 1 million barrels per day in August, to 9 million barrels per day.
Russia promised to cut oil exports by 500,000 barrels a day that same month.
To achieve this goal, Russian oil companies will independently decide what to cut in August: oil production or exports, said Deputy Prime Minister Alexander Novak.
In general, our task is to reduce supplies to world markets,” he explained.
Representatives of Russia, Saudi Arabia and other members of OPEC + on June 4 agreed to extend the restrictions on oil production: in 2024, the total level of production by OPEC + countries will be 40.46 million barrels per day.
Quotas are determined for each country: for Russia it will be 9.828 million barrels per day, for Saudi Arabia – 10.478 million barrels per day.
Read also!
As The Wall Street Journal wrote in July, citing the International Energy Agency (IEA), Saudi Arabia may cede the status of the largest oil producer in OPEC + to Russia due to production cuts.
From the agency’s report for June, it followed that Russian oil production is declining at a slower pace than in Saudi Arabia.
[…] countries will be 40.46 million barrels per day, 1.4 million barrels less than now. Unilaterally, Saudi Arabia announced it would voluntarily cut production by another 1 million barrels per day in July to stabilize the […]