Citing an official source in the Saudi Arabian Ministry of Energy, the Saudi Press Agency has reported that the government of Saudi Arabia has made the decision to extend the voluntary reduction in its oil production of 1 million barrels per day (bpd) until the end of the year.
When the production cut was first announced, it was only to take effect for the month of July. It was subsequently extended to include August and September, at which time it was noted the decision on extending it would be revisited each month, with an eye to either enacting further reductions in output, or production increases, based on the state of the market and its pricing.
As it presently stands, following the cuts, production by the Kingdom for the months of October, November, and December will be 9 million bpd, as in previous months. The report noted that the voluntary 1 million bpd decrease is on top of the previous decision to decrease production by 500,000 bpd. That means the total amount of production being cut in September will amount to 1.5 million bpd.
In May, several OPEC+ countries began the imposition of voluntary production cuts which totaled 1.66 million bpd, of which Saudi Arabia’s share amounted to 500,000 bpd. It was originally to remain in effect through the end of 2023, however it was later prolonged until the end of 2024.
At the OPEC+ meeting in Vienna on June 4th, Saudi Arabia announced it would be implementing a unilateral voluntary cut of 1 million bpd for the month of July, and it would review extending the measure at the end of the month. It characterized the cut as an attempt to stabilize the market, which had seen prices on a steady decline.
Russian Deputy Prime Minister Alexander Novak said at the same time that Russia would be extending an additional voluntary reduction in oil supplies of 300,000 barrels per day, which had been put in place for September, until the end of the year. He said, “Russia will extend an additional voluntary reduction in oil supplies to world markets by 300,000 barrels per day until the end of December 2023.”
Novak added that the decision to extend the production cut until the end of the year “is aimed at strengthening the precautionary measures taken by OPEC+ countries in order to maintain stability and balance of oil markets.”
Russia had begun voluntarily reducing its oil production by 500,000 bpd from its February average starting in March. The reduction was later extended to June, and then until the end of 2023. After the Vienna meeting June 4th, the decision was extended through the end of 2024.
