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Heavyweight producer Saudi Arabia will extend a 1 million barrel per day voluntary crude oil output cut into September, in the third month of such declines, the state-owned Saudi Press Agency said Thursday.
“In effect, the Kingdom’s production for the month of September 2023 will be approximately 9 million barrels per day,” it said, citing a source from the Saudi Ministry of Energy.
The 1 million barrel per day cut, which was also implemented in July and August, “can be extended or extended and deepened,” the SPA said. It adds to 1.66 million barrels per day of other voluntary production declines that some members of the Organization of the Petroleum Exporting Countries are putting in place until the end of 2024.
Voluntary cuts fall outside of the production policy agreed by OPEC and its allies, known as OPEC+. One of the group’s technical committees — the Joint Ministerial Monitoring Committee — meets virtually on Friday to review market fundamentals. The JMMC cannot independently decide policy, but may call an extraordinary meeting of OPEC ministers to do so.
Oil prices were little changed shortly after the announcement of Saudi Arabia’s voluntary production cut extension.
Brent futures with October expiry were trading at $83.65 per barrel at 2:30 p.m. London time (9:30 a.m. ET), up by 45 cents from the Wednesday settlement. The WTI contract with September delivery was at $79.97 per barrel, higher by 48 cents from the previous close.
Prices were under pressure in the first half of the year, given macroeconomic concerns, inflationary pressures, turbulence in the banking sector and a slow recovery in Chinese demand.
But OPEC and the Paris-based International Energy Agency both forecast a pickup in demand that could lead to supply tightness in the second half of 2023.