Saudi Arabia will voluntarily cut an additional 1 million barrels per day of crude oil production to support prices following the troubled OPEC+ meeting in Vienna.
Saudi Energy Minister Prince Abdulaziz bin Salman, the de facto leader of OPEC, made the move as part of a deal that saw several weaker African members cut production quotas from next year. Russia, the world’s second-largest oil exporter, could also cut its production target, but the group said it would be subject to review. Meanwhile, the UAE could increase production.
Prince Abdulaziz is trying to prop up oil prices, which have fallen over the past 10 months despite attempts by producers to tighten supplies.
Saudi Arabia and other member countries announced surprise price cuts in April, but prices briefly rose toward $90 a barrel before reversing and briefly falling toward $70 a barrel last week.
Prince Abdulaziz said the 1 million barrel-per-day cut was initially through July but could be extended, describing it as a “Saudi lollipop” or sweetener for the group.
“We just want to finish what we’ve been doing,” he said. “We will do whatever it takes to bring stability to this market.”
The IMF has offered $80 a barrel to Riyadh to help balance its budget and to finance some of the “huge projects” that Crown Prince Mohammed bin Salman hopes will transform the economy. He said he needed oil prices to rise.
The OPEC+ group’s joint production target has been adjusted to 40.5 million barrels per day by 2024, formalizing and extending voluntary cuts announced in April at the group level.
However, the distribution of the reductions has been controversial, and many African Member States initially resisted efforts to revise down the so-called production thresholds, which are said to reflect maximum production capacity and are used to calculate the reductions. was
Weaker OPEC members such as Nigeria and Angola, already struggling to meet their existing production targets due to years of underinvestment, have been reluctant to cut further.
However, the UAE is pushing for a higher production baseline, reflecting investment in its own industry.
Delegates said discussions between OPEC members continued late into the night after the OPEC core meeting on Saturday. Extensive OPEC+ talks, including Russia, Kazakhstan and Mexico, began on Sunday. “We, as usual, have found common ground,” said Russian Energy Minister Alexander Novak at the end of the meeting.
Several journalists, including the entire Reuters and Bloomberg team, were barred from attending a weekend meeting in a sign of heightened tensions between the Saudi energy minister and some media outlets. It is the first time in decades of wars, soaring prices and crashes that OPEC has eliminated the press like this.
OPEC faces criticism for its alliance with Russia after its all-out invasion of Ukraine and for trying to prop up prices during the energy crisis triggered by Russia’s actions.
But analysts say the fall in oil prices since October may have made the White House more optimistic about further cuts as the United States seeks to mend ties with Saudi Arabia.
