Saudi Arabia announced on Tuesday it would extend a voluntary oil production cut of one million barrels per day until the end of the year, continuing its campaign to bolster prices.
The cut which first took effect in July will continue “for another three months until the end of December 2023”, the energy ministry said in a statement.
Riyadh first announced the cut after a June meeting of the 23-nation OPEC+ alliance, which also includes Russia.
A statement in early August revealing that the cut would last through September included a warning that it could be “deepened”, but Tuesday’s announcement has kept it at the same level for now.
That decision “will be reviewed monthly to consider deepening the cut or increasing production”, the energy ministry statement said.
The unilateral Saudi cut followed a decision in April by several OPEC+ members to slash production voluntarily by more than one million bpd — a surprise move that briefly buttressed prices but failed to bring about lasting recovery.
Last October, OPEC+ agreed to reduce output by two million barrels per day.
Oil prices increased in July, the first month the Saudi-only cut took effect, clearing the $80 per barrel threshold analysts often say Riyadh needs to balance its budget, though the various production cuts could push that threshold higher.
“The additional cuts do appear to have boosted prices and the supply is looking tight in Q4 despite rising output from Iran and some other countries,” said Justin Alexander, director of the consultancy Khalij Economics.
“However, the effort has come at a cost to the kingdom, with the reduction of its supply by 10 percent (on top of the 10 percent in cuts coming from the October and April OPEC+ meetings).”
Daily production by the world’s biggest crude exporter is approximately nine million bpd, far below its reported daily capacity of 12 million bpd.
