Saudi Arabia and Russia Curb Oil Supply Again to Try to Boost Prices
Saudi Arabia and Russia announced Monday that they would make additional cuts to oil supply as a global economic slowdown hangs over the outlook for energy demand.
“Saudi Arabia will extend a cut of 1 million barrels a day in its oil production at least until the end of August,” said the world’s biggest exporter of crude oil, aiming to shore up oil prices.
Russia’s Deputy Prime Minister Alexander Novak stated that his country would voluntarily cut supplies by 500,000 barrels per day in August by cutting exports, deepening a previous cut of the same size implemented in March.
The announcements boosted oil prices, with Brent crude rising 0.7% to trade at $76 a barrel and WTI, the US benchmark, increasing 0.8% to $71.
Saudi Arabia needs Brent crude to trade at around $81 a barrel in order to balance its budget, according to the International Monetary Fund.
“This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” said an official source in the Ministry of Energy.
At the June meeting, Riyadh also said it would extend a production cut of 500,000 barrels per day to the end of next year, reducing Saudi Arabia’s total oil output to nine million barrels per day.
Other OPEC+ members have pledged to slash output through the end of 2024 amid a disappointing outlook for global demand.
Chinese factory survey data showed only modest growth in activity, with concerns over sluggish market conditions.
“Optimism around the 12-month outlook for production waned to an eight-month low in June,” analysts at S&P Global wrote.
