Crude Cutbacks: OPEC Reduces Oil Production

05-06-2023

Saudi Arabia has declared a cut in oil production by 1 million barrels per day as a strategy to bolster oil prices. This decision was revealed following a tense Opec+ assembly of oil producers in Vienna this past Sunday. 

The decision was made by Saudi Arabia’s energy minister and Opec’s leader, Prince Abdulaziz bin Salman. The strategy involves a few weaker African members facing reduced quotas starting next year. Furthermore, Russia, the world’s second-largest oil exporter, may also experience a reduction in its production targets, although this is currently under review. In contrast, the UAE has been granted permission to augment its production. 

Despite several endeavours by producers to constrict supplies, oil prices have dipped over the last ten months. There was a sudden cut announced by the kingdom and other members in April, which caused a brief surge towards $90 a barrel. However, the prices eventually dipped again, hitting almost $70 a barrel at one-point last week. 

However, oil prices experienced a surge on Monday morning. The international benchmark Brent crude increased by 1.1 per cent to trade at $76.98 per barrel. In the meantime, the US equivalent, West Texas Intermediate (WTI), saw a rise of 1.3 per cent, trading at $72.66. At one point, WTI surged as much as 4.6 per cent while Brent peaked 3.4 per cent higher.