OPEC’s largest producer Saudi Arabia looks to reverse its unilateral extra production cut of 1 million barrels per day (bpd) after March ends, in view of the recent rally in oil prices, The Wall Street Journal reported on Wednesday, quoting advisers to the world’s top oil exporter.
This month and next, Saudi Arabia is cutting its production by 1 million bpd beyond its quota in the OPEC+ deal, in a unilateral move to support market rebalancing and oil prices which it announced at the January meeting of the OPEC+ ministerial group.
Amid the recovering oil prices, the Saudis plan to announce their decision to reverse the extra cut when the OPEC+ ministers meet in the first week of March to decide production levels from April onwards, the Kingdom’s advisers told the Journal.
Plans could still change if circumstances change, the advisers said, while OPEC delegates told the Journal that the Saudi goal to reverse the additional cut has not been communicated to OPEC yet.
According to the OPEC delegates, the OPEC+ alliance is likely to keep the oil production cuts at the meeting in early March.
Meanwhile, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said on Wednesday that oil producers need to remain extremely cautious as uncertainty on the market is still very high.
“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” Prince Abdulaziz bin Salman said at the energy forum, as carried by Reuters.
The extra Saudi cut has been one of the factors that have supported the oil price rally in recent weeks. With oil above $60 a barrel, however, analysts reckon more OPEC+ members, especially Russia, would likely push for a more aggressive easing of the cuts from April.
Analysts and the market have not forgotten last March’s debacle when Russia and Saudi Arabia disagreed on how to tackle the crashing demand at the start of the pandemic and broke up the OPEC+ pact for a month.
By Tsvetana Paraskova for Oilprice.com
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