Moscow, Russia — Saudi Arabia, UAE and Iraq announced on Sunday they would extend oil supply cuts through June as part of a bid to prop up prices.
An energy ministry source said Riyadh “will extend its voluntary cut of one million barrels per day, which was implemented in July 2023, until the end of the second quarter of 2024,” the official Saudi Press Agency reported.
“Afterwards, in order to support market stability, these additional cut volumes will be returned gradually subject to market conditions.”
The decision was taken “in coordination with some OPEC+ participating countries,” referring to the 23-member bloc Riyadh co-leads with Moscow.
The extension was announced the same day Russia said it would cut its production by almost half a million barrels in the second quarter of 2024.
Riyadh first announced its voluntary cut after an OPEC+ meeting in June 2023.
It followed a decision in April 2023 by several OPEC+ members to slash production voluntarily by more than one million barrels per day (bpd) — a surprise move that briefly buttressed prices but failed to bring about lasting recovery.
In October 2022, OPEC+ agreed to reduce output by two million barrels per day, a move that fueled tensions with US President Joe Biden’s administration, which said it amounted to siding with Russia in the war in Ukraine.
The announcement on Sunday means Saudi Arabia’s production will stay at roughly nine million bpd, well below its capacity of 12 million bpd.
Iraq extends 220,000-bpd cut
Iraq also announced it will extend its voluntary oil production cut of 220,000 barrels per day until June 2024 to reinforce the OPEC+ alliance’s strategy.
The oil ministry of Iraq, second-largest producer in the Organization of the Petroleum Exporting Countries, said it “will extend its voluntary cut of 220,000 barrels per day for the second quarter of 2024 in coordination with some OPEC+ countries,” producing four million bpd until the end of June.
UAE production to remain at 2.912 bpd
The United Arab Emirates announced that it will extend its additional voluntary cut of 163,000 barrels per day (bpd), for the second quarter of 2024, in coordination with some OPEC+ countries.
In a statement, the UAE said that its production will remain at 2.912 million bpd until the end of June 2024. Afterwards, in order to support market stability, these additional cut volumes will be reversed gradually subject to market conditions.
This voluntary cut is in addition to the voluntary cut of 144,000 bpd previously announced by the UAE in April 2023, which extends until the end of December 2024, the statement explained.
This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets, WAM reported.
Russia to cut production
Russia will cut oil production by almost half a million barrels per day in the second quarter of 2024, the government said Sunday, as part of a move to boost prices.
The plan, agreed with Russia’s energy allies in the OPEC+ group, comes on top of previous cuts to both oil output and exports as some of the world’s largest energy producers drive to push up market rates amid economic uncertainty.
Russia’s Deputy Prime Minister Alexander Novak said Sunday that Moscow will reduce its output by 350,000 barrels a day (bpd) in April, by 400,000 bpd in May and then 471,000 bpd in June.
“In order to maintain market stability, these additional cuts will be gradually restored depending on market conditions,” after the end of the second quarter, Novak said in a statement published by the Russian government.
Russia’s state finances rely on income from lucrative oil and gas revenues.
The West has tried to target Moscow’s energy exports under sanctions imposed over the Kremlin’s offensive in Ukraine, forcing Russia to ramp up supplies to countries like China and India.
Europe was for decades Russia’s main energy client.
Russia had already agreed to cut production by 500,000 bpd last year in a plan that runs until the end of 2024.
Russia on Sunday also agreed to further trim its export volumes — by 121,000 bpd in April and 71,000 bpd in May, compared to its average sales in the same months last year.
“This additional voluntary reduction is aimed at strengthening the precautionary measures taken by OPEC+ countries to maintain stability and balance in the oil markets,” Novak said.