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Saudi Arabia output cuts to kick in from July; will oil prices rise again
Saudi Arabia – the world’s largest oil producer, will undertake voluntary crude oil output cuts which are set to kick in this month, starting from July 1, amid a tighter market which is currently reeling under the impact of sluggish global economic growth and further rate hike fears by global banks.
In the previous meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on June 4, no changes in global oil output were announced for the remainder of this year. However, the world’s top oil exporter, Saudi Arabia output will decline to 9 million barrels per day from about 10 million barrels in May, as per its fresh production cuts set to kick in from July.
OPEC+ reached a deal on output policy and decided to reduce overall production targets from 2024 by a further total of 1.4 million barrels per day (bpd). Apart from Saudi, the rest of the OPEC producers agreed to extend earlier cuts in supply through the end of 2024.
Saudi Energy Minister Prince Abdulaziz said the cut of 1 million bpd by Riyadh could be extended beyond July if needed. “This is a Saudi lollipop,” he said. The deal came after a last-minute fight with African members over how their cuts are measured, which delayed the meeting by several hours.
In addition, Saudi Aramco – the world’s largest oil company, believes market fundamentals remain “sound” for the second half as demand from emerging markets led by China and India will offset recession risk in developed markets, CEO Amin Nasser said last week.
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