Saudi Arabia to continue cutting oil production until end of December

Saudi Arabia will continue to cut oil production by one million barrels per day (bpd) for “three more months“, from October to December 2023, maintaining its strategy to support crude prices, announced Tuesday the Ministry of Energy. The cuts from the world’s top crude exporter were announced in June following an OPEC+ meeting and first took effect in July. OPEC+ brings together members of the Organization of Petroleum Producing Countries (OPEC), led by Saudi Arabia, and allied states including Russia.

“The kingdom’s production for the months of October, November and December will be around nine million bpd“, said the ministry in a press release. According to him, this strategy will bereviewed monthly with a view to further reducing or increasing production“. This policy is intended tosupport the stability and balance of oil markets“, he added. Ryad had announced an extension for September, warning that it could be “reinforced” beyond.

Read alsoRussia maintains cut in oil exports until end of 2023

The effort came at ‘a cost to the kingdom’

The unilateral Saudi production cut follows several OPEC+ members’ decision in April to cut output by more than a million bpd, which briefly supported prices, but failed to allow a sustained recovery. Oil prices firmed in July, the first month the Saudi cut took effect, crossing the $80-a-barrel threshold the kingdom needs to balance its budget, analysts said.

“The additional cuts appear to have boosted prices well and supply appears tight in the fourth quarter despite increased production from Iran and some other countries“, told AFP Justin Alexander, director of the consulting firm Khalij Economics. “However, this effort came at a cost to the kingdom, which reduced its supply“, he added. Daily production for the world’s largest crude exporter is around nine million bpd, well below its daily capacity, officially 12 million bpd.