Saudis Extend 1 Million-Barrel Oil Cut, Say Can Be Deepened - Bloomberg

Saudis Extend 1 Million-Barrel Oil Cut, Say Can Be Deepened - Bloomberg

Saudi Arabia extended its unilateral oil production cut by another month, and said it could be prolonged further or even deepened.

The leader of the Organization of Petroleum Exporting Countries will prolong the cutback of 1 million barrels a day — launched last month — into September, according to a statement on state Saudi Press Agency. That will hold output at about 9 million barrels a day, the lowest level in several years. Crude futures jumped.

The measure — which comes on top of supply curbs Riyadh was already making with others in the OPEC+ producers group — is intended to “to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.”

Oil prices have recovered recently, reaching a three-month high above $85 a barrel earlier this week in London, as the post-pandemic recovery in fuel demand, combined with output curbs by OPEC+ countries, begins to tighten world crude markets.

But with the economic outlook still clouded by lackluster data from China and fears of recession in the US, Riyadh is showing no signs of relaxing its grip. Besides, the kingdom may need prices of as much as $100 a barrel to cover government spending, according to Bloomberg Economics. Brent futures surged as much as 1.7% after the Saudi announcement on Thursday.