Oil prices rise as Opec+ (Saudi Arabia) pledges production cuts
3 min read
Oil prices rise as producing countries Opec+ (Saudi Arabia) pledges production cuts from July
Oil prices rise as producing countries Opec+ (Saudi Arabia) pledges production cuts from July.
Oil prices rose following OPEC bigwig Saudi Arabia’s decision to cut production by another million barrels per day.
On Sunday, the Organization of the Petroleum Exporting Countries and its partners (known as OPEC+) made no changes to its planned oil production cuts for the rest of the year.
However, the world’s top oil exporter Saudi Arabia announced further voluntary output cuts which will be implemented from July.
The kingdom’s output will decline to 9 million barrels per day from around 10 million barrels in May, Saudi’s energy ministry said in a statement.
Saudi Arabia said it would make cuts of a million barrels per day (bpd) in July and Opec+ said targets would drop by a further 1.4 million bpd from 2024.
Both benchmarks rose more than 2% on Monday during early Asia trade but dipped lower by mid-morning.
OPEC+ pumps approximately 40% of the world’s crude and production decisions can have a significant impact on prices.
On April 3, several producers of the oil cartel revealed a combined 1.66 million barrels per day of production declines until the end of this year.
The seven-hour-long meeting on Sunday of the oil-rich nations, led by Russia, came against a backdrop of falling energy prices.
Total production cuts, which Opec+ has undertaken since October 2022, reached 3.66 million bpd, according to Russian Deputy Prime Minister Alexander Novak.
Opec+, a formulation that refers to the Organization of Petroleum Exporting Countries and its allies, had already agreed to cut production by two million bpd, about 2% of global demand.
“The result of the discussions was the extension of the deal until the end of 2024,” Mr Novak said.
On Sunday, Saudi Energy Minister Prince Abdulaziz bin Salman said the cut of one million bpd could be extended beyond July if needed. “This is a Saudi lollipop,” he said, in what is seen as a bid to stabilize the market.
Public schools in crisis as government delays release of Ksh 28B capitation fund
NHIF given ultimatums to clear outstanding bills as hospitals start rejecting cards
God will help Ruto transform Kenya like Kibaki, CS Kindiki
Fuel dealers raise an alarm over the low uptake in the country
Saudi Arabia’s decision to make a voluntary reduction of one million barrels per day was unexpected but does not come as a huge surprise. As the leader of the pack, and also the largest exporter of oil, it was the only one in a position to be able to lower output.
The move by the Saudis also underlines the uncertain outlook for demand for fuels in the months to come. Concerns about the global economy, especially recessionary fears in the US and Europe are expected to put further pressure on crude prices.
Oil producers are grappling with falling prices and high market volatility amid the Russian invasion of Ukraine.
The West has accused Opec of manipulating prices and undermining the global economy through high energy costs, according to Reuters.
It has also accused the group of siding with Russia despite sanctions over the invasion of Ukraine.
In response, Opec insiders have said the West’s monetary policy over the last decade has driven inflation and forced oil-producing nations to act to maintain the value of their main export.
Also read,
MCAs rubbishes Ruto’s directive, vows to shut down counties over salary row
Business CEOs in fear of Ruto’s plan- Report
Ruto explains his new plan to lower fuel prices
Al-Shabab killed 54 Ugandan soldiers in Somalia, Museveni
Follow us
