[1/3] Photo of Saudi Energy Minister Prince Abdulaziz bin Salman Al-Saud attending the OPEC meeting in Vienna. /Picture taken June 4, 2023 in Vienna, Austria/REUTERS/Leonhard Foeger
VIENNA, June 4 (Reuters) – Saudi Arabia will make deep production cuts in July, part of an OPEC+ deal to curb a broader output cap.
Saudi Energy Minister Prince Abdulaziz said the 1 million barrels per day (bpd) cut could be extended beyond July if required by Riyadh. “It’s a Saudi lollipop,” he said.
OPEC+, a group of allies led by the Organization of the Petroleum Exporting Countries and Russia, reached an agreement on production policy after seven hours of talks and decided to cut overall output targets by 1.4 million barrels per day from 2024.
However, many of these reductions will not materialize as the group has reduced its targets for Russia, Nigeria and Angola.
Instead, the UAE was allowed to raise production.
OPEC+ pumps 40% of the world’s crude oil, meaning its policy decisions can have a huge impact on oil prices.
OPEC+ already cut 2 million bpd last year and accounted for 2 percent of global demand.
In April, it also agreed to a surprise voluntary reduction of 1.6 million bpd until the end of 2023, which took effect in May.
Saudi Arabia said on Sunday it would extend part of its voluntary cuts of 0.5 million bpd until 2024. It is not clear whether the July 1 million cut is more than 0.5 million bpd or will be included in a second July cut.
The April announcement helped push oil prices up $9 a barrel to above $87, but they quickly retreated under pressure from worries about global economic growth and demand. On Friday, Brent, the international benchmark, was at $76.
The West accused OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West has accused OPEC of supporting Russia in defiance of Western sanctions over Moscow’s invasion of Ukraine.
In response, OPEC insiders have said that Western money printing over the past decade has fueled inflation and forced oil-producing nations to act to preserve the value of their key exports.
Asian countries such as China and India, which buy a large share of Russia’s oil exports, have refused to join Western sanctions against Russia.
Reporting by Ahmed Khader, Alex Lawler, Maha El Dahan and Julia Payne; Written by Dmitry Zhdanikov; Editing by Barbara Lewis and David Holmes
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