Saudi Arabia's oil production cut will last a further two months coming to an end in April, the kingdom's energy ministry has announced.
Speaking in a televised interview with Bloomberg yesterday, Saudi Energy Minister Prince Abdulaziz Bin Salman said: "We gave the oil industry a wonderful present and a wonderful surprise. We're extending support and help to the industry."
According to the prince, Saudi Arabia made its decision separately from the other 22 member states of the Organisation of the Petroleum Exporting Countries (OPEC) and without consulting them. That is because influencing them to also make further cuts would have been "excruciating" for many of them, as the organisation's member states already agreed to cut oil production last summer in order to stabilise the market.
Many have speculated as to any political factor that the Saudis may have cut their oil for, with the global investment bank RBC Capital Markets suggesting that it may be "intended as an olive branch to Washington" before the United States' new President Joe Biden is signed in later this month. If that is the case, it would be due to predictions that Biden's administration would be tougher with Riyadh compared to President Donald Trump.
Prince Abdulaziz dismissed those notions, however, stating: "I fail to see any correlation between the two events. We have always been cordial and congenial with any US administration – past, present, and the future."
This current oil production cut, which sees a decrease in a million barrels per day from the kingdom, will apply to both domestic sales and international exports. It comes after the huge oil price war between Saudi Arabia and Russia in March last year, which was triggered by an argument between Crown Prince Mohammed Bin Salman and President Vladimir Putin.
That conflict ravaged global oil markets, which were already being destabilised by the coronavirus pandemic.