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Monday, May 27, 2024

Saudi Arabia cuts oil production by 1 million barrels

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Hope to increase the price of black gold

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Saudi Arabia announced on Monday that it will further cut oil production in July as part of the wider OPEC+ agreement to curb production, with the hope that the move will boost the price of the black gold.

Saudi Arabia's Energy Minister, Prince Abdelaziz bin Salman, said the 1 million bpd production cut could be extended beyond July if necessary.

This is a “voluntary” reduction, he explained at the press conference he gave after the meeting in Vienna of the 13 OPEC member countries and the ten cooperating countries, led by Russia.

Reductions implemented since early May by 9 countries, including Saudi Arabia and Russia (a total of 1.6 million barrels per day) will be extended until the end of 2024, Russian Deputy Prime Minister Alexander Novak said speaking to journalists.

Despite the surprise decision in April to cut production, the price of oil did not skyrocket as many analysts had feared.

The North Sea Brent is currently at $76 a barrel while US WTI crude is at $71, a far cry from the $140 the price reached in March 2022, at the start of the war in Ukraine.

Russia has been wary of further production cuts, as oil finances its military operations in Ukraine.

Moscow has nothing to gain something from the price increase. Due to Western sanctions, it is allowed to export oil at or below $60 per barrel.

Above this limit, companies (insurance, shipping) are prohibited from provide their services for the maritime transport of black gold.

Source: www.kathimerini.com.cy

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