Saudi pledges big oil cuts in July as OPEC+ extends deal into 2024
Last edited Sun Jun 4, 2023, 09:26 PM - Edit history (2)
Source: Reuters
VIENNA, June 4 (Reuters) - Saudi Arabia will make a deep cut to its output in July on top of a broader OPEC+ deal to limit supply into 2024 as the group seeks to boost flagging oil prices. Saudi's energy ministry said the country's output would drop to 9 million barrels per day (bpd) in July from around 10 million bpd in May, the biggest reduction in years.
"This is a Saudi lollipop," Saudi Energy Minister Prince Abdulaziz told a news conference. "We wanted to ice the cake. We always want to add suspense. We don't want people to try to predict what we do... This market needs stabilisation". OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world's crude, meaning its policy decisions can have a major impact on oil prices.
A surprise decision to cut supply in April briefly sent international benchmark Brent crude around $9 higher, but prices have since retreated under pressure from concerns about the weakness of the global economy and its impact on demand. On Friday, Brent ended trade for the week at $76.
Saudi Arabia is the only member of OPEC+ with sufficient spare capacity and storage to be able to easily reduce and increase output. It was able to respond rapidly to excess supply that weakened the market in the early stages of the pandemic in 2020 when the group of producers implemented record output cuts.
Read more: https://www.reuters.com/business/energy/opec-meets-debate-production-quotas-new-cut-sources-2023-06-04/
Article updated.
Previous article/headline -
VIENNA, June 4 (Reuters) - Saudi Arabia will pledge new voluntary production cuts as part of a broader OPEC+ deal to curb output, sources told Reuters, as the group faces flagging oil prices and a looming supply glut. The group, known as OPEC+, reached a deal on output policy after seven hours of talks, the sources said.
Two OPEC+ sources said the group was likely to maintain an existing output agreement for 2023 and make additional cuts in 2024 if new production baselines for members, from which cuts are made, are agreed. It was not clear when Saudi would start making its voluntary cuts or how much Riyadh and OPEC+ as a whole would cut.
OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world's crude, meaning its policy decisions can have a major impact on oil prices. Since Friday OPEC+, sources have told Reuters that additional production cuts could amount to 1 million barrels per day on top of existing cuts of 2 million bpd and voluntary cuts of 1.6 million bpd, announced in a surprise move in April and that took effect in May.
The April announcement helped to drive oil prices about $9 per barrel higher to above $87, but they swiftly retreated under pressure from concerns about global economic growth and demand. On Friday, international benchmark Brent settled at $76. If approved, a new cut would take the total volume of reductions to 4.66 million bpd, or around 4.5% of global demand.
Original article/headline -
VIENNA, June 4 (Reuters) - OPEC and its allies met on Sunday to try to agree further cuts in production, sources told Reuters, as the group faces flagging oil prices and a looming supply glut. The group, known as OPEC+, delayed the start of formal talks by at least three and a half hours due to members' discussions on the sidelines of production baselines, from which cuts and quotas are calculated, sources said.
OPEC's most influential members and biggest Gulf producers led by Saudi Arabia were trying to persuade under-producing African nations such as Nigeria and Angola to have more realistic output targets, sources said. "Talks with African producers are proving to be difficult," one OPEC+ source said. Gulf producer, the United Arab Emirates, was meanwhile seeking a higher baseline to reflect its growing production capacity, sources said.
OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world's crude, meaning its policy decisions can have a major impact on oil prices. Four sources familiar with OPEC+ discussions have told Reuters that additional production cuts were being discussed among options for Sunday's session. "We are discussing the full package (of changes to the deal)," one of the four sources said.
Three out of four sources said cuts could amount to 1 million bpd on top of existing cuts of 2 million bpd and voluntary cuts of 1.6 million bpd, announced in a surprise move in April and that took effect in May. The April announcement helped to drive oil prices about $9 per barrel higher to above $87, but they swiftly retreated under pressure from concerns about global economic growth and demand. On Friday, international benchmark Brent settled at $76.
= new reply since forum marked as read
Reminds me a political cartoon from the early '80s, where a fat Sheikh is having dinner with his wife, and starts whining:
"My cartel just doesn't understand me!"
