Saudi Arabia, the world’s biggest oil exporter and Opec's largest producer, extended its voluntary output reductions until the end of the second quarter of 2024 in order to support oil market stability.
The kingdom will extend its voluntary cut of “one million barrels per day, which was implemented in July 2023, until the end of the second quarter of 2024 in co-ordination with some Opec+ participating countries”, the state-run Saudi Press Agency said on Sunday, quoting an official source from the Kingdom’s Ministry of Energy.
The production cut is in addition to the voluntary cut of 500,000 barrels a day previously announced by the Kingdom in April 2023, which will stay in effect until the end of December 2024, the SPA said.
The Kingdom’s production will be approximately 9 million bpd until the end of June 2024. “Afterwards, in order to support market stability, these additional cut volumes will be returned gradually subject to market conditions,” the source said.
Saudi Arabia said this “additional voluntary cut comes to reinforce the precautionary efforts made by Opec+ countries with the aim of supporting the stability and balance of oil markets”.
Last month, Opec+ members announced they would keep their oil production policy unchanged.
"The JMMC reviewed the crude oil production data for the months of November and December 2023 and noted the high conformity for participating Opec and non-Opec countries," Opec said in a statement at the time.
In their previous meeting, in November, Opec+ members including Russia and Saudi Arabia extended their voluntary oil output reductions until the end of the first quarter of 2024 due to concerns about fuel demand.
The Kingdom, which benefited from the rally in crude prices last year amid the Ukraine war, has cut oil output in an attempt to stabilise the market.
Last month, the Kingdom announced its budget deficit reached 80.9 billion Saudi riyals ($21.57 billion) in the 2023 fiscal year, narrower than the government’s previous estimates, as oil revenue dipped amid production cuts.
Oil prices surged on Friday and recorded a weekly again amid expectations that Opec+ crude producers would extend supply cuts into the second quarter.
Crude prices have been volatile this year, largely due to supply concerns arising from attacks on oil vessels in the Red Sea.
Meanwhile, persistent high inflation in major economies has added to uncertainty regarding the outlook for crude demand, which has capped oil price gains.
Updated: March 03, 2024, 12:15 PM