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Saudi Arabia will lose its status as the largest OPEC+ oil producer to Russia as it begins the unilateral cut of 1 million barrels per day (bpd), with the Kingdom pledging to pump around 9 million bpd in July and August—the lowest level in two years.
Excluding the deep cuts during the pandemic, a Saudi production of just around 9 million bpd would be the lowest level the world’s top crude oil exporter has pumped since 2011.
“The Kingdom’s crude output is set to plunge to a two-year low of around 9 mb/d in July and August, leaving it trailing behind Russia as the bloc’s top crude producer,” the International Energy Agency (IEA) said in its Oil Market Report on Thursday.
In a bid to push oil prices higher, or “stabilize the market” as Saudi Arabia and OPEC put it, the Kingdom announced last month a unilateral cut of 1 million bpd to its production levels for July, while the OPEC+ producers who had pledged cuts between May and December extended those cuts into 2024. Last week, Saudi Arabia said it would extend its unilateral production cut into August, and will be producing around 9 million bpd in both July and August.
“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 market,” Saudi Arabia said on July 3.
Minutes after the Saudi announcement, Russia’s Deputy Prime Minister Alexander Novak said that Russia would cut its crude oil exports by 500,000 bpd in August in a bid to ensure a balanced market. However, the top oil official in Russia and lead OPEC+ negotiator, didn’t give any figures as to the volume of the Russian production and exports for August, nor the baseline from which the cut would be made.
The August cut in exports would mean an additional cut in oil production by 500,000 bpd in August, Novak’s office told Russian daily Vedomosti.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com