Saudi Arabia has announced to cut oil production by one million barrels per day in July. The announcement came after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna. Though, the extra cuts announced by Saudi Arabia are being done unilaterally.
Saudi Energy Minister Prince Abdulaziz bin Salman said that the cut which is announced for the month of July could be extended. Saudi Arabia’s Ministry of Energy said that it will now produce 9 million barrels of crude oil per day which is 1.5 million barrels less than it was producing per day earlier this year.
The move is considered to be an attempt to prop up oil prices in response to global economic uncertainty and concerns that international demand could drop. Though the country maintains that it does not use the cost of crude to make oil production decisions.
Meanwhile, OPEC countries also agreed to extend oil production cuts they announced earlier in April through the end of 2024. This will reduce the amount of crude they pump into the world market by more than 1 million barrels per day.
Global oil production ranges around 100 million barrels a day. OPEC countries produce about 40% of the world’s crude oil.
OPEC which is a 13-member organization headed by Saudi Arabia and its 10 partners, led by Russia enables the co-operation of leading oil-producing countries in order to collectively influence the global market and maximise profit.
The cuts come shortly after Memorial Day in the U.S. and on the peak of the busy summer travel season. Crude oil prices are closely associated with the cost of gasoline.
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