Saudi Arabia announced on October 4th that it will continue oil supply cuts of 1 million barrels per day (bpd) until the end of the year.
This announcement by the oil-producing nation comes after it implemented additional supply cuts in September and stated that the cuts would be reviewed every month.
As of October 4th, Brent crude is trading at $90.34 per barrel. Crude prices have cooled down from the highs of $97 per barrel reported last week, on account of stronger dollar.
Russia, too, announced to continue its current export cuts of 300,000 bpd until the end of 2023, in a separate official statement.
To be sure, the voluntary cuts announced by the two OPEC+ (or Organisation of Petroleum Exporting Countries and its allies) nations are in addition to the earlier cuts implemented in May.
In May, OPEC+ had cut oil production by 1.6 million bpd for 2023. OPEC’s de-facto leader Saudi Arabia had reduced supply by 500,000 bpd, while Iraq had cut over 200,000 bpd until the end of the year. Russia, which is part of OPEC+, had announced an extension of its production cut of 50,000 bpd till the end of 2023.
To support prices, Saudi further cut production in July by 1 million bpd while Russia reduced exports by 300,000 barrels a day.
The announcements by Saudi and Russia comes hours ahead of the OPEC’s Joint Ministerial Monitoring Committee (JMMC) meeting which reviews output of the member countries.
India urges OPEC for affordability in oil market
Union minister of Petroleum and Natural Gas Hardeep Singh Puri on October 3 urged OPEC to review supply cuts to maintain balance and affordability in the oil markets.
In a bilateral discussion with OPEC Secretary General Haitham Al-Ghais, Puri addressed crude production cuts by OPEC and its impact on global energy sector. The meeting was held on the sidelines of Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2023.
The oil minister advocated for balancing global energy markets by ensuring that crude oil prices do not outstrip the paying ability of the consuming countries.
Crude oil prices have been on an upward trend since Saudi Arabia and Russia implemented voluntary additional cuts in July. Prices, which were trading in the range of $70-$75 per barrel in the first half of 2023, are currently hovering around $90 per barrel.
India is dependent on imports for meeting over 85 percent of its crude oil requirements and is, therefore, quite sensitive to international oil prices.
Crude oil prices have risen over 30 percent in the last three months.
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