© Oil Price
An official source in the Saudi Ministry of Energy stated that the Kingdom will reduce its crude oil production by 500,000 barrels per day (bpd), starting from May until the end of 2023, in coordination with a number of countries participating in the declaration of cooperation between OPEC and non-OPEC countries (OPEC+).
The source in the Ministry of Energy confirmed that this is a precautionary measure aimed at supporting stability in oil markets.
Similarly, the UAE announced it will reduce production by 144,000 bpd from May until the end of 2023.
Iraq announced it will reduce production by 211,000 bpd, while Kuwait announced it will reduce production by 128,000 bpd.
Oman announced a voluntary cut in oil production by 40,000 bpd, while Algeria announced a voluntary cut in oil production by 48,000 bpd.
The OPEC+ countries are scheduled to hold a meeting of the ministerial monitoring committee tomorrow, 3 April, via video conference.
These cuts follow a large cut in production, 2 million bpd, announced by the OPEC+ countries last October, which further squeezed an already tight global supply.
The White House, already concerned with high gas prices in the US, described OPEC's October decision as "shortsighted."
"The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin's invasion of Ukraine," the White House announced.
Today's announced cuts come amid fears that oil demand may be further slowing as the world economy slows. Oil prices dropped 10% last month following the eruption of a banking crisis in which several large banks, including Silicon Valley Bank and Credit Suisse bank collapsed.
Comment: The measure may be intended to stabilise oil markets, but another effect will be that the West will struggle to replenish their rapidly dwindling stocks.