On Thursday, August 3, Brent crude price was $84.71 per barrel (4:39 PM, GMT+1), after a slight fall earlier in the day. This was after Saudi Arabia decided to extend its crude oil production cut which began in July, till the end of September 2023.
This is according to reports from its state news agency on Thursday, August 3, which also stated that the production cuts could be further deepened or extended.
Bloomberg also reports that Saudi’s production cut will hold production output at about 9 million barrels a day, which is the lowest level for the country in several years.
According to OPEC chief correspondent, Amena Bakr, provided clarification as to the reason for the decision.
While addressing the possibility that Saudi Arabia could be targeting a $100 per barrel scenario, Bakr said this was not the case, as the rationale behind the decision was completely different.
She wrote via her Twitter handle:
- “A few points on the extension… is Saudi Arabia targeting 100-dollar oil? No, they are not, the extension is a sign of how committed they are to ensuring a balanced market and encouraging the industry to continue investing in upstream capacity.”
Meanwhile, Russia’s Deputy Prime Minister, Alexander Novak has said that to ensure the oil market remains balanced, Russia will continue its voluntary reduction in oil supply during September.
Bloomberg had earlier reported on the possibility that Saudi Arabia would extend its cuts. On August 3, Raad Alkadiri, managing director at Eurasia Group, told Bloomberg that following a price recovery and a shift in market sentiment, Riyadh will not want to rock the ship by restoring 1 million barrels a day of supply that markets are now expecting to remain shut in.
When production is cut and supplies dwindle, crude prices rise. Analysts at Goldman Sachs have recently projected that global crude oil prices, particularly Brent crude could rise to $86 per barrel by the end of 2023.
Meanwhile, Brent crude rose to $85.58 per barrel on Wednesday, August 2.
Also, Reuters reports that oil prices have risen significantly since Russia and Saudi Arabia announced supply cuts in early July 2023, with Brent crude oil, climbing from around $76 a barrel to above $83 per barrel.
What you should know:
OPEC will be meeting on Friday, August 4, to review the oil market and recent crude production cuts.
