Oil production cuts to boost the price
June 5, 2023 - Saudi Arabia has pledged to cut oil production by one million barrels per day (bpd) from July. The cut is on top of previous OPEC+ cuts to limit supplies as the group seeks to boost oil prices.
A surprise announcement by OPEC+ to deepen production cuts in April helped push prices by about $9 a barrel to above $83 per barrel.
However, benchmark crude prices have shed those gains since, with Brent futures trading at just under $78 a barrel on Monday.
On Sunday, OPEC producers agreed to extend earlier cuts in supply through the end of 2024. Saudi Energy Minister Prince Abdulaziz bin Salman said the country’s output would drop to nine million bpd in July from around 10 million bpd in May. Prince Abdulaziz said he would do “whatever is necessary to bring stability to this market,” following the tense OPEC+ meeting.
The West has repeatedly criticised OPEC for manipulating prices, while the U.S. is eyeing legislation known as NOPEC, which would allow the seizure of OPEC’s assets on American territory if market collusion is proven.
OPEC+ pumps around 40% of the world’s crude and has cut its output target by 4.6 million bpd since October 2022, amounting to 4.7% of global demand.