Unilateral restrictions on oil supplies have been prolonged for another three months.
Traders fear new difficulties caused by OPEC+ support for the fragile global market balance. Saudi Arabia’s state press agency reported on Tuesday that the leader of the Organization of Petroleum Exporting Countries would continue to cut production by 1 million barrels per day until December.
The decision makes it possible to keep production at around 9 million barrels per day for a total of six months. This is the lowest figure in the last few years. At the same time, Russia is going to reduce crude oil exports by 300,000 barrels per day for the same period. Deputy Prime Minister Alexander Novak claims that this decision would be reviewed monthly to control the volume of production.
Today, the demand for crude oil is reaching record levels, despite the renewed rise in prices. Due to the decision taken by the two countries, the price of Brent crude oil rose by 1.54% to $90.37 per barrel.
Most OPEC+ members are suffering losses due to underfunding and operational disruptions urging Riyadh to take the initiative to support prices. However, protecting the oil market proved costly for Saudi Arabia. According to Bloomberg Economics, the kingdom may need to raise the price of oil to almost $100 per barrel to cover spending projects of Crown Prince Mohammed bin Salman.
Bjarne Schieldrop, chief commodities analyst at SEB AB, claims there is no sign that Saudi Arabia will deviate from the current pricing course. These measures were discussed in advance with Russian partners.
Price over volume is the name of the game.
