Saudi Arabia Aims to Stabilize Oil Market with Extended Production Cuts
Xinhua News Agency, Riyadh (July 3, 2020)
Saudi Arabia has recently announced its decision to extend voluntary oil production cut measures until the end of August, with a daily output expected to hover around 9 million barrels. This move comes as the kingdom seeks to stabilize and balance the oil market amidst the ongoing economic uncertainties triggered by the COVID-19 pandemic.
According to a source from the Saudi Ministry of Energy, the initial voluntary production reduction of 1 million barrels per day, which was implemented from July onwards, has now been extended for an additional month, giving rise to the possibility of a further extension once the period is over.
The precautionary efforts initiated by Saudi Arabia since April involve both the original voluntary production cut measures and this subsequent reduction in output. These measures aim to overcome the market challenges driven by weakened demand for spot crude oil.
Experts, such as Faisal Fayek, a renowned Saudi energy specialist, assert that the decision to extend production cuts aligns with the subdued demand for crude oil observed in the market. The downturn in global economic activity, coupled with ongoing travel restrictions and reduced industrial operations, has led to a significant drop in oil consumption.
This latest extension of production cuts follows Saudi Arabia’s earlier announcements on April 2 and June 4. Initially, a daily reduction of 500,000 barrels had been planned between May and the end of the year, and subsequently, an additional 1 million barrels per day cut for the entire month of July.
By extending its voluntary production cuts, Saudi Arabia reaffirms its commitment to market stability and endeavors to restore balance in the face of unprecedented global challenges. As the oil industry navigates through these turbulent times, this move is expected to have a significant impact on the overall dynamics of the market.
Saudi Arabia announced that it will extend the voluntary oil production cut measures for a month until the end of August, and the daily oil production will be around 9 million barrels
Xinhua News Agency, Riyadh, July 3 (Reporter Hu Guan) The Saudi Arabian News Agency quoted a source from the Saudi Ministry of Energy on the 3rd and reported that Saudi Arabia will extend the voluntary oil production cut measure of 1 million barrels per day starting in July for one month to 8 At the end of the month, it can be extended again after expiry.
According to reports, this voluntary production reduction measure is an additional production reduction based on the voluntary production reduction measures announced by Saudi Arabia in April “precautionary efforts” to stabilize and balance the market.
Saudi media reported on the 3rd that after extending the production cuts, Saudi Arabia’s daily oil output in August will be around 9 million barrels.
Faisal Fayek, a Saudi energy expert, pointed out in an interview with local media that the extension of production cuts reflects weak demand for spot crude oil in the market.
On April 2, Saudi Arabia announced an average daily cut in oil production of 500,000 barrels between May and the end of the year. On June 4, Saudi Arabia announced again after the 35th “OPEC +” ministerial meeting that in July Saudi Arabia would cut production by an additional 1 million barrels per day for a period of one month.
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