OPEC+: Saudi Arabia cuts production by 1 million barrels per day to boost prices
Saudi Arabia said on Sunday it would reduce the amount of oil it sends to the global economy, taking a unilateral step to shore up the plummeting cost of crude after two previous supply cuts by major oil-producing countries in the United States. OPEC+ alliance have failed to drive up prices . Arabia's daily production currently, before the cut, is about 11.5 million barrels, so the cut would be just under 10%.
The announcement of Saudi cuts of 1 million bpd, which will begin in July, followed an alliance meeting at OPEC headquarters in Vienna. The rest of OPEC+ producers have agreed to extend previous production cuts until the end of 2024.
“ This is a great day for us, because the quality of the deal is unprecedented,” Saudi Energy Minister Abdulaziz bin Salman told a press conference, adding that the new production targets are “ much more transparent and much fairer".
Calling the Saudi cut a "lollipop," bin Salman said, "We wanted to frost the cake." He said the cut could be extended and that the group "will do whatever it takes to bring stability to this market."
Crashing oil prices have helped US motorists fill up their tanks more cheaply and given consumers around the world some relief from inflation. It is possible that the latest production cut will drive up oil prices and with them the cost of gasoline. This could give a boost to inflation in the EU.
The fact that the Saudis have deemed another cut necessary underscores the uncertain outlook for fuel demand in the coming months. Economic weakness in the US and Europe is a cause for concern, while China's recovery from COVID-19 restrictions has been less robust than many had hoped.
Saudi Arabia, the dominant producer in the OPEC oil cartel, was one of several members that agreed to a surprise cut of 1.16 million barrels per day in April. The Kingdom's share was 500,000 barrels. Then, in October, OPEC+ announced it would cut 2 million barrels a day, angering US President Joe Biden and threatening to hike gasoline prices a month before the midterm elections.
However, the cuts have not given a lasting boost to oil prices. International benchmark Brent crude climbed as high as $87 a barrel, but has given up post-cut gains in recent days and settled below $75 a barrel. US crude fell below $70.
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The article OPEC+: Saudi Arabia cuts production by 1 million barrels per day to boost prices comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/opec-larabia-saudita-taglia-la-produzione-di-1-milione-di-barili-al-giorno-per-rilanciare-i-prezzi/ on Sun, 04 Jun 2023 19:14:26 +0000.