Saudi Arabia has announced that it will extend its voluntary production cut of 1 million barrels of oil per day until the end of the year. This decision comes as the kingdom seeks to boost sluggish crude oil prices. While monitoring the market, the country remains open to taking further action if necessary.
The Saudi Press Agency report states, “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.” Brent crude traded at $90 a barrel immediately after the announcement, which is higher than its range of $75 to $85 since last October.
In contrast, other OPEC+ producers have agreed to extend earlier production cuts through next year. Despite a series of production cuts over the past year, oil prices have not seen significant improvement due to weakened demand from China and tighter monetary policies aimed at combating inflation.
Saudi Arabia is particularly eager to increase oil prices to finance their Vision 2030 plan, which aims to transform the kingdom’s economy, reduce oil dependency, and create jobs for its young population. This plan includes ambitious projects like the construction of the futuristic $500 billion city, Neom. Higher oil prices would also benefit Russian President Vladimir Putin in funding his war on Ukraine, as Western countries have imposed a price cap to limit Moscow’s revenues.
Additionally, Western sanctions have forced Moscow to sell its oil at a discount to countries like China and India. These factors contribute to the complexities of the global oil market and the efforts made by Saudi Arabia to stabilize and balance it.
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