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Saudi Arabia and Russia announced their plans to cut oil production significantly to shore up the falling prices. While Saudi will cut production by one million barrels a day, Russia announced that it would cut its exports by 500,000 bpd in August
Saudi Arabia and Russia announced their plans to cut oil production significantly to shore up the falling prices. While Saudi will cut production by one million barrels a day, Russia announced that it would cut its exports by 500,000 bpd in August. This measure, both countries expect, would stabilize the oil prices, which have been steadily falling, and that too with high market volatility.
Saudi Arabia voluntarily decided in early June to make a further production cut in the hope of boosting prices. This will continue into August and even beyond. This move by the OPEC plus countries is broadly aimed at stabilizing the prices. Saudi Arabia’s oil production will now shrink to around nine million barrels per day.
In April, several Opec+ members decided to voluntarily cut their production by more than a million barrels a day but fell short of the desired result of stabilizing the price. In the meantime, Russia’s Deputy Prime Minister Alexander Novak said that it will voluntarily cut deliveries to oil markets by 500,000 barrels a day in August by reducing exports by this amount. Moscow has redirected its energy exports from Europe to India and China since the start of the Russia-Ukraine war.
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Saudi Arabia is undertaking an ambitious reform program that could enable its economy to move away from fossil fuels. Analysts estimate that the kingdom needs oil prices of US$80 a barrel to balance its budget, well above the averages recorded in recent years.
