Riyadh, Saudi Arabia — Saudi Arabia announced on Monday it was extending a voluntary oil production cut of one million barrels per day, in a bid to prop up slumping prices.
The cut which first took effect for July will continue in August and “can be extended”, the official Saudi Press Agency (SPA) reported, citing an energy ministry source.
“The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” SPA said.
The move leaves daily production by the world’s biggest oil exporter at approximately nine million bpd.
Announcing the cut following last month’s meeting of oil producers, Saudi Energy Minister Prince Abdulaziz bin Salman noted that it was potentially “extendable”.
It followed a decision in April by several OPEC+ members to slash production voluntarily by more than one million bpd — a surprise move that briefly buttressed prices but failed to bring about lasting recovery.
Oil producers are grappling with falling prices and high market volatility, continued fallout from the Russian invasion of Ukraine and China’s faltering economic recovery.
Saudi Arabia is counting on high oil prices to fund an ambitious reform agenda that could shift its economy away from fossil fuels.
Analysts say the kingdom needs oil to be priced at $80 per barrel to balance its budget, which is well above recent averages.
Russia to cut exports
Russia’s top energy official said Monday that Moscow will voluntarily cut oil exports by 500,000 barrels per day, building on previously announced production cuts.
“As part of efforts to ensure that the oil market remains balanced, Russia will voluntarily reduce its oil supply in the month of August by 500,000 barrels per day, by cutting its exports by that quantity to global markets,” Alexander Novak, the Russian deputy prime minister responsible for energy policy, said in comments carried by Russian news agencies.
Novak’s announcement Monday comes on the back of cuts to Russian oil production this year by the same volume as part of Moscow’s response to Western sanctions levied over the conflict in Ukraine.
Since the beginning of large-scale hostilities in Ukraine last February, Moscow has pivoted energy exports from Europe to India and China.