Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman announced a further voluntary oil output cut of 1 million barrels per day for July, with the possibility of further extensions, as stated by the country’s energy ministry on Sunday.
These new production cuts are in addition to the existing cuts of 2 million barrels per day (bpd) and voluntary cuts of 1.6 million bpd, which were surprisingly announced in April and took effect in May.
Following seven hours of negotiations, OPEC+ reached an agreement on output policy. The alliance has decided to implement additional production cuts, reducing the overall production targets by a combined 1.4 million barrels per day starting from 2024, as per Reuters.
The decision was reached in coordination with some OPEC+ members, according to the ministry’s report. During the 35th ministerial meeting of OPEC Plus on June 4, 2023, the ministry confirmed that this voluntary reduction from the required production level was agreed upon.
Following a two-day meeting, OPEC and its allies have decided to implement further production cuts in response to declining oil prices and the potential for a surplus in supply.
OPEC+, a coalition comprising the Organization of the Petroleum Exporting Countries and Russia-led allies, currently accounts for approximately 40% of global crude oil production, making their policy decisions influential in shaping oil prices.
As per a statement by OPEC, the 36th OPEC and non-OPEC Ministerial Meeting will be held on Sunday, 26 November 2023, in Vienna.
West accuses OPEC
Western nations have accused OPEC of manipulating oil prices and negatively impacting the global economy due to high energy costs. Additionally, there are concerns about OPEC’s perceived alignment with Russia, despite Western sanctions imposed on Russia following its invasion of Ukraine.
OPEC officials argue that the excessive money-printing by Western nations in the past decade has fueled inflation, compelling oil-producing countries to take action to protect the value of their main export.
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Notably, Asian countries such as China and India have been major consumers of Russian oil exports and have refrained from joining Western sanctions against Russia.
While the April announcement initially boosted oil prices by around $9 per barrel to surpass $87, they quickly receded due to apprehensions about global economic growth and demand. As of Friday, the international benchmark Brent settled at $76.
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