July 03, (THEWILL) – Saudi Arabia is extending its unilateral 1 million bpd production cut into August, the world’s top crude exporter said on Monday, sending oil prices rising by 1%.
“An official source from the Ministry of Energy announced that the Kingdom of Saudi Arabia will extend the voluntary cut of one million barrels per day, which has gone into implementation in July, for another month to include the month of August that can be extended, and in effect, the Kingdom’s production for the month of August 2023 will be approximately 9 million barrels per day,” the official Saudi Press Agency (SPA) reported on Monday.
Oilprice.com reports that the extension was not a total surprise for the market.
Back in early June, the OPEC+ producers decided to keep the current cuts until the end of 2024, while OPEC’s top producer, Saudi Arabia, said it would voluntarily reduce its production by 1 million bpd in July, to around 9 million bpd. The cut could be extended beyond July, Saudi Energy Minister Prince Abdulaziz bin Salman said a month ago.
The extension is now a fact, Saudi Arabia says.
“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 the oil market,” the Saudis said today.
Saudi Arabia has been looking to prop up oil prices for months after concerns about the global economy sent benchmark prices below $80 per barrel. That’s the level the International Monetary Fund (IMF) has estimated as the breakeven price for Saudi Arabia to balance its budget this year.
Early on Monday, after the Saudi announcement of an extension of the cuts for another month, Brent was up by 0.89% at $76.06, while the U.S. benchmark, WTI Crude, was up 0.93% at $71.30 per barrel.
Despite Saudi efforts so far, Brent oil prices have been trading below the $80 a barrel mark since the end of April.