Saudi Arabia and other OPEC+ oil producers announced on Sunday voluntary cuts in their production of about 1.15m barrels per day in a surprise move they said was aimed at supporting market stability.
The move came despite US pressure to pump more crude.
Cuts by the Saudis, Iraq, UAE, Kuwait, Algeria and Oman from May to the end of the year will total more than a million barrels a day – the biggest reduction since the OPEC+ cartel cut 2m barrels a day in October.
OPEC+ member Russia said it was extending its cuts of 500,000 barrels a day until the end of this year, calling it a “responsible and preventive action”.
An official of the Saudi energy ministry “stressed that this is a precautionary measure aimed at supporting the stability of the oil market”, the official Saudi Press Agency said.
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The cuts were published in a series of statements from the various countries.
The output cuts are the result of a controversial decision in October by OPEC and its allies, including Russia – collectively known as OPEC+ – to cut production by two million barrels per day.
That drop, the biggest since the Covid Pandemic in 2020, came despite concerns that it would fuel further inflation and put pressure on central banks to raise interest rates even more.
“This voluntary initiative is a precautionary measure taken to ensure market balance,” UAE Energy Minister Suhail bin Mohammed Al Mazrouei said, according to the official WAM news agency on Sunday.
Saudi Arabia will cut 500,000 barrels per day, Iraq 211,000, the UAE 144,000, Kuwait 128,000, Algeria 48,000 and Oman 40,000, each country announced.
The US is looking for more output
The statements came a day before OPEC+ is to hold a meeting of the Joint Ministerial Monitoring Committee on Monday via video conference, according to the UAE.
The cuts were announced despite calls from the United States to raise production as consumption rises and as China, the world’s biggest oil consumer, reopens after its Covid shutdown.
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“As the economies of the world recover, we will see more consumption. And so we want to see the supply meet the demand,” said Jose Fernandez, US Undersecretary of state for economic affairs, energy and the environment, on side of the CERAWeek. energy conference, in Houston, Texas, last month.
“We want to see more supply” of crude worldwide, including from OPEC+, Fernandez said.
OPEC+ is made up of the 13 members of the Organization of the Petroleum Exporting Countries and 11 countries that are not allies of OPEC.
US President Joe Biden has regularly called for OPEC+ output to be increased after Russia’s invasion of Ukraine sent prices skyrocketing.
OPEC also raised its forecast for world oil demand for 2023 in February, saying it expected demand to grow by 2.3m barrels per day to an average of 101.87m barrels per day this year.