Riyadh on Sunday announced its new reduction in oil output in a bid to prop up prices amidst concerns recession.
The announcement came following a meeting of the 13-member Organization of the Petroleum Exporting Countries (OPEC) headed by Saudi Arabia and its 10 partners, led by Russia.
Saudi Energy Minister Prince Abdulaziz bin Salman told reporters after the hours-long OPEC+ meeting at the group’s headquarters in Vienna that the cut is for July but "can be extended."
Analysts had largely expected OPEC+ producers to maintain their current policy, but signs emerged this weekend that the 23 countries were mulling deeper cuts.
In April, several OPEC+ members agreed to cut production voluntarily by more than one million bpd -- a surprise move that briefly buttressed prices but failed to bring about lasting recovery.
Based on an OPEC+ table outlining the production levels needed for the next year, the United Arab Emirates will be able to increase their current oil output. Conversely, countries such as Angola, the Republic of Congo, and Nigeria have experienced reductions in their assigned quotas.
According to a report by Bloomberg news agency, African nations have shown reluctant to give up some of their quotas, even though they have been unable to fulfill them.
Since the announcement of the April cuts, oil prices have experienced a significant decline of approximately 10 percent. Brent crude, specifically, has dropped to nearly $70 per barrel, a level not seen since December 2021.
According to the Paris-based agency gathering of the 31 mostly industrialized countries and much of the European Union (EU), the current market pessimism stands in stark contrast to the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by almost 2 million bpd.
Russia's Deputy Prime Minister Alexander Novak expresses reluctance to alter OPEC's trajectory, citing limited advantages from increased prices. Since Western sanctions hit Moscow over Ukraine, Russia has been supplying oil to India and China, who have taken advantage of the affordable crude.
