In addition, Riyadh will reduce production by 1 million barrels in July.
Saudi Arabia has voluntarily decided to cut oil production on its territory by the end of next year.
By December 2024, Riyadh will pump 500,000 bpd less than current rates. In addition, Saudi officials announced that they will reduce volumes by another 1 million in July of this year. Thus, the kingdom plans to produce an average of 9 million barrels per day.
The Organization of the Petroleum Exporting Countries and its allies reportedly agreed on 4 June to slow oil production. Saudi Energy Minister Prince commented on the decision. Abdulaziz bin Salman He urged him to trust OPEC+, which he called “the most influential international organization” working to restore market stability. He noted that the steps taken were the usual measures.
It was reported even before the meeting on Sunday that OPEC+ countries could reduce oil production by 1 million barrels per day. At that time, a production limit of 2 million barrels per day was already in effect. After the meeting, it was decided that Saudi Arabia and some other states would keep the black gold production volume at the same level.
The reason for this step taken by OPEC+ was the decrease in black gold prices due to the excess supply in the markets. Against the background of the rumors about the upcoming decline, the cost of Brent and WTI oil rose by 1% and 1.2%, respectively, but fell again on June 5th. Later, Saudi officials admitted that they expected more effects from the next production cut. Currently, prices are still 20% lower than at the end of last year, when OPEC+ announced a new cut in production.
It is noteworthy that Saudi Arabia has taken this step twice since last year’s negotiations with the United States, which sought to put pressure on the kingdom and force it to increase oil production. After the OPEC+ decision was announced, Washington said it would closely monitor the balance of supply and demand in the oil markets.
Source: Riafan
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