As a “precautionary measure” to maintain market stability, Saudi Arabia and other OPEC+ oil producers have announced voluntary curbs to their output totaling around 1.15 million barrels per day (bpd).
When its ministerial panel, which includes Saudi Arabia and Russia, virtually meets on Monday, the 23-nation group had been generally anticipated to stick to its already agreed 2 million bpd reduction.
The Organization of the Petroleum Exporting Countries (OPEC) and 10 allies, led by Russia, agreed to output restrictions of 2 million bpd starting in November, which infuriated Washington because a limited supply drives up oil prices.
The globe needs lower prices, according to the United States, to boost economic expansion and keep Russian President Vladimir Putin from generating more income to finance the conflict in Ukraine.
The unexpected voluntary cuts announced on Sunday are in addition to the ones originally decided in October and begin in May.
According to official announcements, Riyadh stated it would drop production by 500,000 bpd while Iraq would do so by 211,000 bpd.
Production will be reduced by 144,000 bpd in the United Arab Emirates, 128,000 bpd in Kuwait, 40,000 bpd in Oman, and 48,000 bpd in Algeria. Kazakhstan will reduce production by 78,000 bpd as well.
According to the deputy prime minister of Russia, a voluntary drop of 500,000 bpd will continue until the end of 2023.
In February, after Western price restrictions had been implemented, Russia unilaterally announced such reductions.
US officials claimed that Russia’s alliance with the other members of OPEC+ was waning after Moscow unilaterally reduced its oil production. However, Sunday’s action demonstrates that the cooperation is still strong.
A representative from the Saudi energy ministry “emphasised that this is a precautionary measure aimed at supporting the stability of the oil market,” according to the official Saudi News Agency
In response to the banking crisis that followed the failure of two American firms and saw Credit Suisse saved by Switzerland’s largest bank UBS, oil prices dropped to 15-month lows last month.
Amrita Sen, the founder and head of Energy Aspects, stated on Sunday that OPEC was taking preventative measures in the event of a potential fall in demand.