Analysis: Saudi Arabia's 'icing on the cake' oil cut could feed US producers | Reuters
Saudi Arabia has crafted a complex OPEC+ deal with a view to punishing investors that have bet on falling oil prices but could inadvertently lend long-term support to the rival U.S. energy industry, OPEC+ insiders and market watchers said.
On Sunday, Saudi Arabia pledged to cut its oil output by 1 million barrels per day (bpd), or 10%, in July on top of existing output cuts from OPEC and its allies. With the new Saudi reduction, the group has agreed to take some 4.6 million bpd off the market in July, equivalent to 4.6% of global demand of 100 million bpd.
OPEC+ also agreed on Sunday to extend the group's existing supply cuts of 3.66 million bpd into 2024.
In response, oil prices rose nearly $2 a barrel early on Monday to $78 per barrel . Analysts said the gains are only the beginning and the cuts will steadily deepen a global supply shortfall that could push prices towards $100 a barrel.
"This market needs stabilisation," Saudi Energy Minister Prince Abdulaziz bin Salman said on Sunday, calling his surprise decision to deepen Saudi production cuts "the icing on the cake" for the deal.
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