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Major oil producers announced production cuts.

 

Oil drills
Saudi Ara­bia and other major oil-pro­du­cing nations yes­ter­day announced sur­prise pro­duc­tion cuts totalling more than 1mn bar­rels a day, put­ting Riy­adh on a col­li­sion course with the US as the king­dom attempts to boost prices.

Saudi Ara­bia will imple­ment a «vol­un­tary cut» of 500,000 b/d, or just under 5 per cent of its out­put, in «coordin­a­tion with some other Opec and non-Opec coun­tries» it said.

Rus­sia, which is also a mem­ber of the Opec+ group of oil pro­du­cers, said it would extend its exist­ing 500,000 b/d pro­duc­tion cut until the end of the year. Moscow’s reduc­tion was first announced last month in retali­ation against west­ern coun­tries’ impos­i­tion of a price cap on its seaborne oil exports.

The Saudi-led ini­ti­at­ive was announced without a formal Opec+ meet­ing, sug­gest­ing an ele­ment of urgency by the coun­tries involved.

The sur­prise cuts risk reignit­ing a dis­pute between Riy­adh and the US, which pushed the king­dom to pump more oil last year in a bid to tame rampant infla­tion amid a surge in energy costs after Rus­sia’s full-scale inva­sion of Ukraine.

In Octo­ber, when Opec+ announced a formal pro­duc­tion cut of 2mn b/d, the White House accused Saudi Ara­bia of, in effect, sid­ing with Rus­sia.

People famil­iar with Saudi Ara­bia’s think­ing say Riy­adh was irrit­ated last week that the Biden admin­is­tra­tion pub­licly ruled out new crude pur­chases to replen­ish a stra­tegic stock­pile that had been drained in the previous year as the White House battled to tame infla­tion. «It’s a Saudi-first policy. They’re mak­ing new friends, as we saw with China,» Croft said, refer­ring to a recent Beijing-brokered dip­lo­matic deal between Saudi Ara­bia and Iran. The king­dom was send­ing a mes­sage to the US that «it’s no longer a uni­polar world», she added.

The vol­un­tary cuts from Opec+ mem­bers will begin in May and last until the end of 2023, the Saudi state­ment said. Iraq will reduce crude pro­duc­tion by 211,000 b/d; the United Arab Emir­ates by 144,000 b/d; Kuwait by 128,000 b/d; Kaza­kh­stan by 78,000 b/d; Algeria by 48,000 b/d; and Oman by 40,000 b/d, accord­ing to state­ments from their respect­ive gov­ern­ments.

www.sba.tax

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