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Oil Prices Jump As Saudi Arabia Extends Oil Production Cut

Oil prices jumped on Thursday after Saudi Arabia said it would extend its unilateral voluntary cut of 1 million barrels per day (bpd) into September, adding that the cut could be extended or extended and deepened.

Minutes after the Saudi announcement via the official Saudi Press Agency, oil prices – which were flat until then – rose by 1%.

The Saudi extension was largely expected by the market and traders. The announcement comes a day ahead of a regular meeting of the Joint Ministerial Monitoring Committee (JMMC) of the OPEC+ group, which regularly discusses the situation on the market and the need for OPEC+ intervention. The panel is not expected to change the OPEC+ production policy.

At the latest meeting in June, OPEC+ decided to extend the current cuts into 2024. Those cuts were originally intended to last between May and December 2023. But the largest surprise came from Saudi Arabia, the world’s top crude oil exporter and OPEC+ leader, which announced a unilateral production cut of 1 million bpd for July.

Early in July, the Saudis extended the cut into August, too, “to support the stability of the market.”

Now Saudi Arabia is extending the cut into September.

“Saudi Arabia will extend the voluntary cut of one million barrels per day, which has gone into implementation in July, for another month to include the month of September that can be extended or extended and deepened,” the Saudi Press Agency reported on Thursday, citing an official source from the Ministry of Energy.

The Kingdom’s production for the month of September 2023 will be around 9 million bpd, as it is in July and August.

“The source also noted that this cut is in addition to the voluntary cut previously announced by the Kingdom in April 2023, which extends until the end of December 2024,” the Saudi agency said.  

“The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets.”

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By Charles Kennedy for Oilprice.com

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