Oil Producers Led By Saudis Extended Supply Cuts Amid Slack Prices

Frankfurt, Germany – Saudi Arabia and other oil-producing countries extended output restrictions into next year on Sunday, aiming to preserve low oil prices that have yet to climb despite Middle Eastern upheaval and the start of the summer vacation season.

The OPEC+ alliance, which includes members of the producers cartel and allied countries such as Russia, resolved at an online conference to maintain current production levels, which include collective cutbacks of 2 million barrels per day, until December 31, 2025.

Saudi Oil | AP news image

Oil Producers Led By Saudis Extended Supply Cuts Amid Slack Prices

Saudi Arabia needs higher oil prices to pay Crown Prince Mohammed bin Salman’s ambitious plans to diversify the country’s economy away from fossil fuel exports. Higher oil prices would also aid Russia’s economic growth and stability, as it spends significantly on its conflict against Ukraine.

The OPEC+ statement did not specify what would happen to another set of voluntary cutbacks, which included a decrease of 2.2 million barrels per day by a smaller group of alliance members, including Saudi Arabia. Analysts predicted that the unilateral cutbacks, which expire at the month’s end, would also be extended.

Saudi Oil | Arab Times Image

Oil Producers Led By Saudis Extended Supply Cuts Amid Slack Prices

International benchmark Brent has remained in the $81-$83 per barrel range for the past month. Even the fighting in Gaza and attacks on ships in the Red Sea by Houthi rebels in Yemen have not pushed prices above $100 per barrel, which was last seen in September 2022.

Higher interest rates, concerns about demand caused by slower-than-expected economic growth in Europe and China, and increased non-OPEC supply, especially from U.S. shale producers,

US motorists have benefited from lower oil prices. Gasoline prices have been stable recently, averaging $3.56 per gallon last week, a penny lower than a year ago. This is a decrease from the record national average high of $5 per gallon in June 2022.

Saudi Oil | FT News Image

Oil Producers Led By Saudis Extended Supply Cuts Amid Slack Prices

Gas prices in the United States rise in tandem with crude oil prices because oil accounts for half the cost of a gallon of gasoline. Price swings are substantially lower in Europe since taxes account for a larger share of the cost of fuel.

SOURCE – (AP)