Oil prices rise $1 as Saudi Arabia plans to extend production cuts from July

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Oil prices rose on Monday after world-leading exporter Saudi Arabia pledged to cut production by another 1 million barrels per day from July to counter macroeconomic headwinds weighing on the market. It rose by $1 per barrel.  Brent futures closed at $77.15 a barrel by 6:45 a.m. GMT, hitting a session high of $78.73 a barrel before closing at $1.02 ($1.02). 1.3%). US West Texas Intermediate crude rose $1.02, or 1.4%, to $72.76 a barrel after hitting an intraday high of $75.06 a barrel. 

The deal on Friday saw production drop to 2 million barrels per day (bpd) in July, after the Saudi Ministry of Energy announced that Saudi production would fall from about 10 million barrels per day (bpd) in May to 9 million barrels per day (bpd) in July. led to an increase of more than Job cuts in Saudi Arabia are the biggest in years. The voluntary cuts pledged by Saudi Arabia on Sunday come under a broad agreement by the Organization of the Petroleum Exporting Countries and its allies, including Russia, to limit supplies until 2024 in a bid to boost oil price declines. 

The group, known as OPEC+, produced about 40% of the world’s crude oil and cut 3.66 million barrels per day, or 3.6% of global demand. “Saudi Arabia is more keen than most of its members to keep oil prices above $80 a barrel, and this is an indication of its own economy,” said Subro Sarkar, head of energy team at DBS Bank. “It’s essential for balancing the annual budget.” 

“Saudi Arabia is likely to do whatever it takes to keep oil prices high in the future, taking calculated preemptive action to ensure that macroeconomic concerns that could affect demand are quashed. Let’s go.” Consultancy Rystad Energy said further cuts by Saudi Arabia would likely widen the market deficit in July to more than 3 million barrels per day, which could push prices higher in the coming weeks. Analysts at Goldman Sachs said the meeting was “moderately optimistic” for the oil market, and that depending on how well Saudi Arabia maintains production at 9 million barrels per day over the next six months, oil production could drop by 2023. He said in December that Brent could rise by $1 to $6 a barrel. However, many of the OPEC+ production cuts will have little real impact, as the sub-targets for Russia, Nigeria and Angola are calibrated to actual production levels. 

“This is largely a paper cut, simply reflecting the reality of persistently lower levels of output in some OPEC countries compared to existing targets,” said Sarkar of DBS Bank. By contrast, the United Arab Emirates (UAE) was allowed to raise its production target by 200,000 bpd to 3.22 million bpd to assuage “concerns” about a possible OPEC exit, Sarkar said. Stated. 


The number of oil rigs in the United States fell by 15 last week to 555, the lowest level since April 2022, Baker Hughes Corp (BKR.O) said in a weekly report on Friday. U.S. drilling has slowed since December due to lower prices, higher costs and companies diverting spending to redeem shareholders.

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