Saudi Arabia and Russia, the world’s biggest oil exporters, have announced deepening oil production cuts to support falling crude prices, pressured by concerns over a global economic slowdown and possible further interest rate hikes from the US Federal Reserve.
An official source from the Ministry of Energy announced that the Kingdom of Saudi Arabia will extend the voluntary cut of one million barrels per day, which has gone into implementation in July, for another month to include the month of August that can be extended, and in effect, the Kingdom’s production for the month of August 2023 will be approximately 9 million barrels per day, Saudi Arabia’s official news agency SPA said in a report.
The source also noted that this cut is in addition to the voluntary cut previously announced by the Kingdom in April 2023, which extends until the end of December 2024, SPA said.
As per a report by Reuters, the cuts amount to 1.5% of global supply and bring the total pledged by OPEC+ to 5.16 million bpd.
OPEC+ already has in place cuts of 3.66 million bpd, amounting to 3.6% of global demand, including 2 million bpd agreed last year and voluntary cuts of 1.66 million bpd agreed in April and extended to December 2024, the report said.
In an effort to support falling oil prices, Saudi Arabia, the de facto chairman of OPEC, promised earlier this month to drastically reduce its output in July on top of the broader OPEC+ agreement to limit supplies through 2024.
As per a report by our sister publication Arabian Business, the Ministry of Energy source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets.