Saudi Arabia announced on Monday that it was extending its oil production cut by one million barrels per day (bpd) to boost prices at half mast, with Russia announcing in the process to cut its exports by 500,000 bpd in august.
These measures are the latest taken by major producers to stabilize prices in the face of high market volatility, the lingering fallout from the Russian invasion of Ukraine and the faltering economic recovery in China.
Saudi Arabia, OPEC heavyweight, decided in early June to make a new production cut in the hope of raising prices.
This voluntary reduction, which came into effect this weekend, will continue in August and “may be extended” beyond this period, the kingdom’s official news agency said, citing a source from the Ministry of Energy. .
“The source confirmed that this additional voluntary reduction reinforces the precautionary measures taken by the OPEC+ countries with the aim of supporting the stability and balance of the oil markets”, added the press agency.
This decision maintains the production of the rich oil kingdom at around 9 million barrels a day.
Announcing the cut last month following the meeting of oil producers, Saudi Energy Minister Prince Abdulaziz bin Salman said it was potentially “extendable”.
In April, several OPEC+ members decided to voluntarily cut production by more than 1 million barrels per day, a surprise move that briefly supported prices but did not lead to a lasting rise.
” Balance “
Shortly after Saudi Arabia’s announcement on Monday, Russia said it would cut crude oil exports by 500,000 barrels a day in August.
“As part of efforts to balance the market, Russia will voluntarily decrease deliveries to oil markets by 500,000 barrels per day in August by reducing exports by this amount,” Deputy Prime Minister Alexander Novak said. , quoted by Russian news agencies.
Russia had already announced in February 2023 a drop in its crude production of 500,000 barrels per day, a measure which it said it wanted to maintain until the end of 2024. The decision announced on Monday concerns exports, not production.
Since the start of the conflict in Ukraine, Moscow has redirected its energy exports from Europe to India and China.
The market reaction to the announcements made Monday by Riyadh and Moscow, allies within OPEC +, a collective bringing together the main oil exporting countries and their partners, was relatively discreet.
Brent, Europe’s crude benchmark, rose 0.98% to $76.15 a barrel, and its US equivalent, WTI, rose 1.02% to $71.36 a barrel, far from the peaks recorded in March 2022 at the start of the conflict in Ukraine (nearly $140).
Since the start of the year, Brent has fallen by 11% and WTI by 7%.
Saudi Arabia, the world’s largest oil exporter, is counting on higher oil prices to fund an ambitious reform program that could move its economy away from fossil fuels.
Analysts say the kingdom needs an oil price of $80 a barrel to balance its budget, well above the averages recorded in recent years.