In a move to support oil prices, Saudi Arabia said on Thursday it would extend its decision to cut oil production by one million barrels a day for another month, until September.
Oil prices have recovered strongly in recent weeks due to smaller fuel stockpiles in the United States, but China’s tepid economic recovery has kept oil prices under pressure for most of the year. Saudi leaders need oil prices to stay high because money from energy sales pays for government spending and ambitious plans to diversify the country’s economy beyond petroleum and commodities. petroleum.
Global Brent oil prices, which had climbed 16 percent in July, were up less than 1 percent, at around $84 a barrel, after the Saudi announcement on Thursday. The Saudi move could put further pressure on US fuel prices, which rose last month. The national average price for a gallon of regular gasoline on Thursday was $3.82, compared to $3.54 last month. The price a year ago was $4.16 per gallon, according to the AAA motor club.
Russia, which agreed last month to cut production by 500,000 barrels a day, will cut by 300,000 barrels a day in September, the country’s deputy prime minister, Alexander Novak, said after the Saudi announcement, according to to Reuters. Russia is selling the bulk of its oil to China and India at discounted prices to fund its war in Ukraine.
Saudi Arabia will produce 9 million barrels a day in September, according to its energy ministry, about 9 percent of global production. It has reduced production by nearly two million barrels a day since the third quarter of last year. Saudi Arabia is a major supplier of oil to Asia. Europe is also buying more Saudi crude, as Russia’s invasion of Ukraine last year has weakened energy ties with Moscow.
With American production at record levels, relatively little Saudi oil was imported into the United States. But the Biden administration is pressuring Saudi Arabia to keep production high because oil prices are set on the global market and are the main factor in determining US fuel prices.
Russia and Saudi Arabia are the leading members of OPEC Plus, the group of major oil-producing countries. Several countries that are not members of the group, including Guyana and Brazil, have ramped up supplies.