Saudi Arabia has declared its decision to decrease oil production by 1 million barrels per day in an effort to boost the dwindling oil prices. This announcement came following a high-stakes meeting of the Opec+ group of producers in Vienna this past Sunday.
Prince Abdulaziz bin Salman, the Saudi energy minister and the de facto leader of Opec, orchestrated this move as part of an agreement. Under this agreement, several weaker African members will see a reduction in their quotas starting from next year.
Russia, which holds the title of the world’s second-largest oil exporter, may also see a decrease in its production targets. However, the group stated that this is subject to revision.
Despite multiple attempts by producers to restrict supplies over the past ten months, oil prices have seen a downward trend. In a surprising move, Opec+ announced a cut in April. Despite an initial surge towards $90 a barrel, oil prices once again dipped, even reaching nearly $70 a barrel at one point last week.
However, this recent announcement triggered a surge in oil prices on Monday. Brent crude experienced a 1.4% rise, reaching $77.17 per barrel, and the US equivalent, West Texas Intermediate, saw a 1.6% increase to $72.94.
The 1 million barrel cut is set to start in July, but Prince Abdulaziz stated it could be extended. He likened this move to a “Saudi lollipop”, a sweet deal for the group, as it allowed other members to avoid additional cuts this year.
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