Saudi Arabia Extends Voluntary Oil Cut Until Mid-2024 to Support Prices

Saudi Arabia has decided to extend its voluntary oil production cut of one million barrels per day until the middle of 2024, aiming to stabilize the oil market and bolster prices. The decision, announced by the official Saudi Press Agency (SPA) on Sunday, comes in coordination with some OPEC+ participating countries, highlighting Riyadh’s commitment to market stability.

The extension of the production cut, which was initially implemented in July 2023, will continue until the end of the second quarter of 2024. Following this period, the additional cut volumes will be gradually returned, depending on market conditions.

This move follows Russia’s announcement on the same day to reduce its production by nearly half a million barrels in the second quarter of 2024. Saudi Arabia’s decision underscores its efforts to support global oil prices amidst ongoing market uncertainties.

Saudi Arabia’s voluntary production cut was first announced after an OPEC+ meeting in June 2023, following a series of attempts to stabilize prices. Despite previous efforts by OPEC+ members to slash production, prices remained volatile, prompting Riyadh’s continued commitment to production cuts.

The decision to extend the production cut aligns with Saudi Arabia’s broader economic agenda, including its ambitious Vision 2030 plan aimed at diversifying the economy away from oil dependency. Crown Prince Mohammed bin Salman is spearheading these efforts, emphasizing the importance of oil revenue in funding the kingdom’s transformation.

As part of its energy transition strategy, Saudi Arabia has set targets to achieve net zero carbon emissions by 2060, with energy giant Aramco pledging to achieve “operational net-zero” carbon emissions by 2050. This shift reflects the kingdom’s recognition of the need to adapt to changing global energy trends.

Despite challenges posed by the ongoing energy transition and market uncertainties, Saudi Arabia remains committed to maintaining its position as a key player in the global oil market. The extension of production cuts reflects Riyadh’s determination to navigate these challenges while pursuing its long-term economic goals.

Sources By Agencies