Saudi Arabia and Russia to extend oil supply cuts, pushing prices higher
Breanne Deppisch
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Saudi Arabia and Russia said Thursday they would extend voluntary supply cuts through September, marking the third straight month of such declines even as lower supplies and rising demand continue to push oil prices sharply higher.
Citing an official from the Saudi Ministry of Energy, state-run news outlet SPA said the kingdom’s voluntary oil cuts of 1 million barrels per day would be “extended for another month to include the month of September that can be [either] extended or extended and deepened.”
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In effect, they said, the kingdom’s production for the month of September will be approximately 9 million barrels per day.
“This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” the ministry official said, according to SPA.
Russia also said Thursday that it would cut its oil exports by 300,000 barrels per day in September, according to Russian Deputy Prime Minister Alexander Novak, who made the announcement shortly after Saudi Arabia’s cuts were reported.
News of the cuts immediately pushed oil prices higher, with futures for international benchmark Brent crude rising as high as $83.96 per barrel by midmorning Thursday and U.S.-based West Texas Intermediate rising to $80.32.
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Oil prices have been pushed higher in recent weeks amid tightening supplies and rising demand, which analysts expect to continue to rise in the second half of the year and into 2024. Goldman Sachs upgraded its oil demand forecast this week, projecting a supply deficit of 1.8 million barrels per day in the second half of 2023.
And Exxon Mobil CEO Darren Woods told CNBC last week he expects demand to reach a record-high in the third quarter of 2023, including “pretty sizable deficits in the second half with deficits of almost 2 million barrels per day.”