Saudi Arabia to extend oil production cut by a month

HOUSTON - In a move to support oil prices, Saudi Arabia said on Thursday that it would

extend its decision to cut oil production by one million barrels a day

for another month, to September.

Oil prices have recovered strongly in recent weeks partly because of smaller stockpiles of fuel in the United States, but China’s tepid economic recovery has kept oil prices under pressure for most of the year.

Saudi leaders need oil prices to stay high because the money from energy sales pays for government spending and ambitious plans to diversify the kingdom’s economy beyond petroleum and petroleum products.

The global Brent oil price, which climbed 16 per cent in July, rose more than 2 per cent, to about US$85 a barrel, after the Saudi announcement on Thursday.

The Saudi move could put additional pressure on US petrol prices, which have surged over the last month.

The national average price for a regular gallon of petrol on Thursday was US$3.82 (S$5.12), up from US$3.54 a month ago. The price a year ago was US$4.16, according to the AAA motor club.

Russia, which had agreed in July to reduce production by 500,000 barrels a day, will cut 300,000 barrels a day in September, the country’s Deputy Prime Minister, Mr Alexander Novak, said after the Saudi announcement, according to Reuters.

Russia has been selling the bulk of its oil to China and India at discounted prices to fund its war in Ukraine.

Saudi Arabia will produce nine million barrels a day in September, according to its Energy Ministry, about 9 per cent of global production.

It has reduced production by close to two million barrels a day since the third quarter of 2022. Saudi Arabia is a major supplier of oil to Asia. Europe is also buying more Saudi crude, since the

Russian invasion of Ukraine in 2022

curtailed energy ties with Moscow.

With American production at record levels, relatively little Saudi oil is imported into the US. But the Biden administration has been pressing Saudi Arabia to keep production high because oil prices are set on the global market and are the major factor in determining US petrol prices.

Russia and Saudi Arabia are the leading members of OPEC+, the group of major oil-producing nations. Several countries that are not members of the group, including Guyana and Brazil, have been ramping up supplies. NYTIMES