Saudi Arabia and other major oil producers on Sunday announced surprise cuts totaling 1.16 million barrels per day from May until the end of the year, a move that analysts said would cause an immediate rise in prices and the United States called inadvisable.
The Saudi Energy Ministry said its own reduction of 500,000 barrels per day would be made in coordination with some OPEC and non-OPEC members. The ministry described the move as a “precautionary measure” aimed at stabilizing the oil market. The cuts represent less than 5 percent of Saudi Arabia’s average production of 11.5 million barrels per day in 2022.
Iraq said it would reduce production by 211,000 barrels per day, the United Arab Emirates by 144,000, Kuwait by 128,000, Kazakhstan by 78,000, Algeria by 48,000 and Oman by 40,000. The announcements were carried by each country’s state media.
Russia’s Deputy Prime Minister Alexander Novak meanwhile said Moscow would extend a voluntary cut of 500,000 until the end of the year. Russia had announced the unilateral reduction in February after Western countries imposed price caps..
Since recent cuts last year, oil prices have actually trended down. Brent crude, a global benchmark, was trading at around $80 a barrel at the end of last week, down from around $95 a barrel since early October.
The decision strikes a new blow to the souring relationship between the U.S. and Saudi Arabia, the latter which has recently moved closer to Russia and China. The U.S. has called on Saudi Arabia and other allies to increase production as it tries to bring prices down and squeeze Russia’s finances as it wages war on Ukraine.