Saudi Arabia has announced a significant reduction in oil production after a tense meeting between the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-related satellites on Sunday.
The Kingdom of Saudi Arabia revealed plans to cut its oil output by 1 million barrels per day for the month of July.
The new reduction is in addition to an existing cut, which will now be extended until the end of 2024. The United Arab Emirates and several other major producers also agreed to extend their production cuts.
OPEC and its Russia-led allies, some 23 nations known as OPEC+, will maintain current production targets until the end of the year. Each member of the cartel has a certain production quota.
OPEC+ has a significant share of the world’s oil output and by cutting production, will boost crude oil prices, unless a sagging world economy lowers demand. Riyadh, however, has shown frustration with Russia, which hasn’t kept its end of the bargain to reduce oil production. Russia disputes that characterization.
Experts believe that the production cut by Saudi Arabia, the world’s largest oil exporter, will have a notable impact on global oil prices, at least in the short term. But the kingdom has been losing market share in the Asia, and its current 500,000 barrel-per-day cuts failed to have an effect on oil prices.