Saudi Arabia said it would make further cuts of one million barrels per day (bpd) in July and OPEC+ said targets would drop by a further 1.4 million bpd from 2024…reports Asian Lite News
The group of oil-producing countries resolved to extend oil production curbs through 2024, but oil kingpin Saudi Arabia has announced further cuts in its output of about one million barrels per day.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC Plus, met on Sunday and resolved to prolong the oil output cutbacks under the leadership of Russia and Saudi Arabia.
OPEC described the move as aiming to “achieve and sustain a stable oil market, and to provide long-term guidance for the market, and in line with the successful approach of being precautious, proactive and preemptive”, The Hill reported.
However, Saudi Arabia said it would make further cuts of one million barrels per day (bpd) in July and OPEC+ said targets would drop by a further 1.4 million bpd from 2024.
Oil prices have risen after Saudi’s announcement of big output cuts. In Asia trade on Monday, Brent crude oil rose by as much as 2.4% before settling at around $77 a barrel, BBC reported.
The United Arab Emirates will extend its voluntary cut of 144 thousand barrels per day until the end of December 2024, as a precautionary measure, in coordination with the countries participating in the OPEC Plus agreement, which had previously announced voluntary cuts in April, state media WAM reported.
OPEC+ accounts for around 40 per cent of the world’s crude oil and its decisions can have a major impact on oil prices.
In Asia trade on Monday, Brent crude oil rose by as much as 2.4 per cent before settling at around $77 a barrel.
The seven hour-long meeting on Sunday of the oil-rich nations, led by Russia, came against a backdrop of falling energy prices.
Total production cuts, which OPEC+ has undertaken since October 2022, reached 3.66 million bpd, according to Russian Deputy Prime Minister Alexander Novak, the BBC reported.
OPEC+, a formulation which refers to the Organization of Petroleum Exporting Countries and its allies, had already agreed to cut production by two million bpd, about 2 per cent of global demand.
“The result of the discussions was the extension of the deal until the end of 2024,” Novak said.
On Sunday, Saudi Energy Minister Prince Abdulaziz bin Salman said the cut of one million bpd could be extended beyond July if needed, the BBC reported.
“This is a Saudi lollipop,” he said, in what is seen as a bid to stabilise the market.
In April, Saudi Arabia, Russia, and other OPEC+ oil producers declared their intention to reduce production by 1.16 million barrels per day. The countries that produce oil had previously agreed to reduce their output by 2 million barrels per day through the end of the year.
When the decision was made, the National Security Council criticised it, stating that the administration did not consider cuts “advisable at this time given market uncertainty.”
President Biden had also threatened that there would be “consequences” for Saudi Arabia, after the country announced the production cut last October of about 2 million barrels per day, The Hill reported.
This move is not expected to affect gas prices in the United States, as pump prices have remained flat even after Memorial Day weekend travel. As of Sunday, the national average of gas prices was USD 3.55 per gallon, according to AAA. (ANI)