Saudi Arabia and other OPEC+ oil producers have announced voluntary cuts to their production amounting to about 1.15 million barrels per day (bpd), calling it a “precautionary measure” aimed at market stability.
The 23-nation group had been largely expected to stick to its already agreed 2 million bpd cuts when its ministerial panel, which includes Saudi Arabia and Russia, meets virtually on Monday.
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In October, OPEC+, which comprises the Organization of the Petroleum Exporting Countries and 10 allies led by Russia, agreed on output cuts of 2 million bpd from November, angering Washington because tighter supply boosts oil prices.
The United States has argued that the world needs lower prices to support economic growth and prevent Russian President Vladimir Putin from earning more revenues to fund the Ukraine war.
Sunday’s unexpected voluntary cuts, which start from May, come in addition to the ones already agreed in October.
Riyadh said it would cut output by 500,000 bpd while Iraq will reduce its production by 211,000 bpd, according to official statements.
The United Arab Emirates said it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd while Oman’s cut will be 40,000 bpd and Algeria’s 48,000 bpd. Kazakhstan will also cut output by 78,000 bpd.
Russia’s deputy prime minister said Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023.
Moscow announced those cuts unilaterally in February after the introduction of Western price caps.
After Russia’s unilateral reductions, US officials said its alliance with other OPEC+ members was weakening, but Sunday’s move shows the cooperation is still strong.
A Saudi energy ministry official “emphasised that this is a precautionary measure aimed at supporting the stability of the oil market”, the official Saudi Press Agency said.
Oil prices fell to 15-month lows last month in response to the banking crisis that followed the collapse of two US lenders and resulted in Credit Suisse being rescued by Switzerland’s biggest bank UBS.
“OPEC is taking pre-emptive steps in case of any possible demand reduction,” Amrita Sen, founder and director of Energy Aspects, said on Sunday.