June 24, 2024

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Saudi Arabia cuts its oil production in July, and OPEC extends the agreement until 2024

Saudi Arabia cuts its oil production in July, and OPEC extends the agreement until 2024
  • Saudis offer new voluntary cuts of 1 million barrels per day for July
  • Russian, Nigerian and Angolan targets aligned with the production
  • The Emirates allowed to raise production

VIENNA (Reuters) – Saudi Arabia will make deep production cuts in July as part of the broader OPEC + agreement to limit production, as the group faces falling oil prices and a looming supply luxury.

Saudi Energy Minister Prince Abdulaziz said Riyadh’s cut of 1 million bpd could be extended beyond July if necessary. “This is a Saudi lollipop,” he said.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies led by Russia, reached an agreement on production policy after seven hours of talks and decided to cut overall production targets from 2024 to 1.4 million barrels per day.

However, many of these cuts will not be real as the group lowered targets for Russia, Nigeria and Angola to bring them in line with actual current production levels.

By contrast, the United Arab Emirates was allowed to increase production.

OPEC + pumps about 40% of the world’s crude, which means that its political decisions can have a significant impact on oil prices.

OPEC+ has already implemented a cut of 2 million barrels per day that was agreed last year and represents 2% of global demand.

And in April it also agreed to a surprise voluntary cut of 1.6 million barrels per day that took effect in May until the end of 2023.

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Saudi Arabia said on Sunday it would extend its share of voluntary cuts of 0.5 million bpd until 2024. It was not clear if the July cut of 1 million bpd was higher than 0.5 million bpd or the latter would be included in the July cut.

The April announcement helped push oil prices nearly $9 a barrel above $87, but they quickly fell back under pressure from concerns about global economic growth and demand. On Friday, the international benchmark Brent crude settled at $76.

Western countries accuse OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West also accused OPEC of standing by Russia despite Western sanctions over Moscow’s invasion of Ukraine.

In response, OPEC insiders said that money printing by the West over the past decade has driven inflation and forced oil-producing countries to work to preserve the value of their main exports.

Asian countries, such as China and India, bought the largest share of Russia’s oil exports and refused to join Western sanctions against Russia.

(Covering) Ahmed Ghaddar, Alex Lawler, Maha El Dahan and Julia Payne. Writing by Dmitry Zhdannikov; Editing by Barbara Lewis and David Holmes

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