Saudi Arabia, Russia deepen oil cuts

Saudi Arabia and Russia, the world’s biggest oil exporters, deepened oil cuts on Monday, sending prices higher despite concerns over a global economic slowdown and possible further interest rate hikes from the US Federal Reserve.

Saudi Arabia said it would extend its voluntary oil output cut of one million barrels per day (bpd) for another month to include August, adding that the cut could be extended beyond that month.

Shortly after, Russian Deputy Prime Minister Alexander Novak said Moscow would cut its oil exports by 500,000 bpd in August. The cuts amount to 1.5% of global supply and bring the total pledged by OPEC+ to 5.16 million bpd.

OPEC+ already has in place cuts of 3.66 million bpd, amounting to 3.6% of global demand, including 2 million bpd agreed last year and voluntary cuts of 1.66 million bpd agreed in April and extended to December 2024.

Oil prices rose on news of the cuts, with Brent up 89 cents to $76.30 a barrel by 0950 GMT.

The alliance has been cutting supply to lift up prices since November last year due to weaker Chinese demand and rising US supply.

“This additional cut comes to reinforce the precautionary efforts made by OPEC+ with the aim of supporting the stability and balance of oil markets,” Saudi state news agency SPA quoted an official source from the Ministry of Energy as saying.

Published in The Express Tribune, July 4^th, 2023.

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