World Middle East Saudi Arabia Cuts Oil Output After OPEC Members Clash Over Quotas Riyadh and some other producers also extend earlier voluntary curbs By Benoit Faucon and Summer Said Updated June 4, 2023 2:19 pm ET 227 You may also like 0:21 Saudi Oil Minister Prince Abdulaziz bin Salman increasingly makes OPEC’s big output decisions, say cartel delegates. Saudi Arabia plans a voluntary production cut of 1 million barrels of oil a day. Photo: Max Brucker/EPA-EFE/Shutterstock VIENNA—Saudi Arabia said Sunday it would make a voluntary cut of 1 million barrels of oil a day as part of a deal between OPEC and its allies after hours of wrangling over the cartel’s production plan amid concerns over slowing global energy demand. Saudi Arabia said the output cut was for July and on top of previously announced voluntary reductions, which would be extended until the end of 2024. The United Arab Emirates and some other large producers also extended their voluntary cuts. The Saudi decision came after members of the Organization of the Petroleum Exporting Countries were huddled together for hours on Sunday at the group’s headquarters to hash out a production plan in what turned out to be a fiery exchange, delegates said. Saudi Arabia was pushing some members to cut output but faced stiff resistance, especially from some African producers, they added. Production plans are usually agreed to in advance among OPEC members who quickly rubber-stamp their approval during the official meetings. This time, tensions within the group over production quotas were high amid concerns over weakening global energy demand, delegates said. Members eventually agreed to roll over their output targets along with their Russia-led allies to break the deadlock, they said. The Saudi decision to voluntarily cut output helped get the deal over the line, delegates said. A production cut of as much as 1 million barrels a day was on the table as OPEC and its Russia-led allies, together known as OPEC+, met this weekend in Vienna to decide on a production plan, delegates had said ahead of Sunday’s meetings. The broader 23-member group accounts for more than half of the world’s oil output. A cut in production was expected to prop up crude prices amid concerns that a slowing global economy would crimp energy demand. This weekend’s OPEC+ meeting was one of the most contentious in recent years. It came amid growing tensions between Saudi Arabia and Russia—two of the world’s biggest oil producers—over previously agreed upon production cuts. Russia keeps pumping huge volumes of cheaper crude into the market, undermining Saudi Arabia’s efforts to bolster energy prices, The Wall Street Journal has reported. Russian Deputy Prime Minister Alexander Novak in Vienna, where OPEC and its allies met this weekend. Photo: joe klamar/Agence France-Presse/Getty Images The decision to roll over its production target comes after OPEC+ in October slashed output by 2 million barrels a day. In April, some of the group’s largest members, including Saudi Arabia and Russia, cut a further 1.6 million barrels a day. The OPEC+ decision in October drew a rebuke from the U.S., which at the time had requested that Saudi Arabia and its allies increase production to help lower energy prices and tame high inflation. The White House called the OPEC+ decision shortsighted and suggested the group was actively supporting Russia’s invasion of Ukraine. Brent crude, the international oil benchmark, is down more than 20% since OPEC+ first jolted the market with output cuts last year. Analysts expect that oil prices will continue to trend low. It wasn’t immediately clear how an agreement to roll over production targets was eventually reached among members of the cartel. OPEC delegates said that the cartel’s big production decisions are increasingly made by Saudi Oil Minister Prince Abdulaziz bin Salman, often without consulting with other group members. On Saturday, Abdulaziz called some of the African delegates to his hotel suite in Vienna and told them that their production quotas within the group would be reduced, people familiar with the matter said. They walked out of the meeting without a deal, the people added. African countries such as Nigeria and Angola have often struggled to even meet their current production targets for various reasons, including pandemic shutdowns that proved hard to reverse and years of underinvestment. Representatives for the energy ministries of Saudi Arabia, the U.A.E., Nigeria, Angola, Equatorial Guinea, Gabon and the Republic of Congo didn’t immediately respond to requests for comment. In recent months, Abdulaziz has also been fixated on Wall Street short sellers, lashing out repeatedly this year against traders whose bets can cause prices to fall. Late last month, he warned them to “watch out,” which some analysts saw as an indication that OPEC+ might reduce output at this weekend’s meeting. The focus on financial markets underscores the pressure facing the first Saudi prince to run the oil ministry. As his half-brother, Crown Prince Mohammed bin Salman, pursues his ambitious plans to reshape the kingdom’s oil-dependent economy, Abdulaziz must keep crude prices at a level that will make those efforts economically feasible. “The prospects of seeing Brent below $70 per barrel is much more frightening than the prospect of a less-balanced market,” said Viktor Katona, a senior analyst at data-commodities agency Kpler. Saudi officials and other people familiar with Saudi oil policy say Riyadh is under pressure to maintain higher oil prices, with its budget requiring an estimated $81 a barrel to break even. In recent months, Saudi economic advisers have privately warned senior policy makers that the kingdom needs elevated oil prices for the next five years to keep spending billions of dollars on ambitious projects that have so far attracted meager investment from abroad. The latest available data indicates that Russia continues to pump large volumes of oil into the market, which has helped maximize income for its beleaguered economy but added to a global surplus, industry officials and traders say. It remains unclear whether Saudi Arabia will take any immediate action that would affect the energy alliance with Russia. Frictions between Riyadh and Moscow aren’t new to OPEC+. In March 2020, oil prices collapsed after Saudi Arabia and Russia failed to agree on an emergency plan to address a supply glut. After the disagreement, Saudi Arabia embarked on a price war in an attempt to grab market share from Russia. Beyond oil, Riyadh and Moscow’s partnership has yielded little so far when it comes to security cooperation, trade or investment.
It gapped up from 71.8 to 75. Unfortunately, there wouldn't be any trading opportunities for the day traders over the next few hours as it gapped too much already.
Great for all of the oil producers in the world especially the USA considering that USA is the biggest oil producer in the world. Bad for China since China is one of the largest importers of oil. Good for us traders since we are going to finally have some volatility in the market to trade.
Chief Engineer to Saudi officials: I took a hammer to a pile of fossil bones, and it turned to dust. Saudi officials: Don't worry about it, the Americans have convinced the world it's a fossil fuel.
right. It went down to where it came from in just 3 hours. OPEC shouldn't have done anything. It is a pure waste of their resources. But OPEC provides trading opportunities. Unfortunately, these movements occurred when I was asleep.
You can't analyze Oil on hourly or even daily moves. The fundamental data is changing and mostly bullish for Oil. The SPR has been shrinking throughout May despite all the news about the US trying to rebuy 3M barrels; why is it dropping 2M a week the including weeks where Oil was in their supposed buy back range a good chunk of the month ? The US govt is bungling this imo and this is the main reason the Saudi's said enough of this bs we'll sell less until the market better reflects reality. This is a really good entry point for Oil producers for several reasons. Todays price action was important in that it solidified gains late last week and ended a down trend. I suspect we are going to high $70s soon but just holding here is constructive for the stocks.