Saudi Arabia will extend a voluntary oil output cut of one million barrels per day for another month to include September, it said yesterday, adding it could be extended beyond that or deepened, Reuters reported.
The kingdom’s production for September will be around nine million barrels per day (bpd), the state news agency SPA cited an official source at the energy ministry as saying.
“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,” the source said.
The cut may be “extended, or extended and deepened”, he added, flagging the possibility of further market tightening.
The decision came on the eve of a panel meeting from OPEC+, which includes members the Organisation of the Petroleum Exporting Countries (OPEC) and allies led by Russia.
The Joint Ministerial Monitoring Committee is unlikely to tweak oil policy at its meeting today, sources have said.
According to the source, the reduction “is in addition to the voluntary reduction decision announced by Riyadh last April, and which extends until the end of December 2024.”
In June, the Saudi Energy Minister, Abdulaziz Bin Salman, announced, after a meeting of oil producers that the decision might be “extendable”.
Oil prices have declined as a result of the Russian invasion of Ukraine and the faltering economic recovery of China.
Saudi Arabia relies on high oil prices to finance an ambitious reform agenda based on achieving economic transition away from fossil fuels. Analysts say Saudi Arabia needs oil to be priced at around $80 a barrel to balance its budget.
The Riyadh-based Jadwa Investment Company reported on Tuesday that the recent supply cuts are starting to achieve the desired effect with the “strengthening” of oil prices.