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Saudi Arabia cuts oil output to boost prices

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Deutsche Welle

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="A gas flame seen in the desert at Khurais oil field, about 160 km from Riyadh, Kingdom of Saudi Arabia, 23 June 2008. Ali Haider/EPA-EFE file" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/overseas/05/02/gas.jpg"/><figcaption>A gas flame seen in the desert at Khurais oil field, about 160 km from Riyadh, Kingdom of Saudi Arabia, 23 June 2008. <em>Ali Haider/EPA-EFE file</em></figcaption></figure></div><p>Saudi Arabia on Sunday announced that it would slash its oil supplies to the global economy in a bid to prop up prices.</p><p>The announcement came after hours-long negotiations at an OPEC+ meeting — the grouping of the 13-member Organization of the Petroleum Exporting Countries (OPEC), headed by Saudi Arabia, and the group&#x27;s 10 partners, led by Russia.</p><p>The meeting was closely watched as a tough one, with Russia seen as wanting to maintain production levels, and Saudi Arabia seeking to push prices.</p><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2640487" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div><p>OPEC+ producers agreed in the meeting in Vienna to extend earlier production cuts through next year, while the Saudi decision to slash 1 million barrels per day (bpd) was a unilateral step.</p><div><strong>What did Saudi Arabia say?</strong></div><p>Saudi Arabia&#x27;s output will drop to 9 million bpd in July from around 10 million bpd in May.</p><p>The country&#x27;s Energy Minister Prince Abdulaziz bin Salman told reporters that Riyadh&#x27;s latest cut is &quot;extendable.&quot;</p><p>OPEC+ producers &quot;will do whatever is necessary to bring stability to this market,&quot; he added.</p><p>&quot;This is a Saudi lollipop,&quot; the prince said. &quot;We wanted to ice the cake. We always want to add suspense. We don&#x27;t want people to try to predict what we do... This market needs stabilization.&quot;</p><div><strong>Why is Saudi Arabia cutting oil output?</strong></div><p>Oil producers have suffered from falling prices and high market volatility in light of Russia&#x27;s war in Ukraine.</p><p>In April, several OPEC+ countries agreed to cut production voluntarily by more than one million bpd. Prices initially jumped after the announcement, but later plunged amid concerns about the weakness of the global economy.</p><p>Analysts see that the latest cut is likely to hike oil prices in the short term, while the long-term impact will depend on whether the cuts are further extended.</p><p>Jorge Leon, senior vice president of oil markets research at Rystad Energy, told the Associated Press (AP) news agency that Riyadh&#x27;s decision provides &quot;a price floor because the Saudis can play with the voluntary cut as much as they like.&quot;</p><p>The oil-rich country needs revenue to balance its budget and fund ambitious state projects. According to estimates by the International Monetary Fund, Saudi Arabia needs $80.90 per barrel to meet its envisioned spending commitments, which include a planned $500 billion futuristic desert city project.</p><div><strong>How is Russia affected?</strong></div><p>The Saudi decision and increases to oil prices could profit Russia, since Moscow has found new oil customers in India, China and Turkey amid Western sanctions.</p><p>Russian Deputy Prime Minister Alexander Novak said Moscow would extend its voluntary cut of 500,000 barrels a day until the end of 2024 under the OPEC+ deal, according to Russian state news agency Tass.</p><p>But Moscow&#x27;s total exports of oil and refined products, such as diesel fuel, rose in April to 8.3 million bpd, according to the International Energy Agency, in a post-invasion record high.</p><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2640485" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div>

Saudi Arabia on Sunday announced that it would slash its oil supplies to the global economy in a bid to prop up prices.