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Saudi leads cartel with its own 500,000 supply reduction
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Members including Iraq, Kuwait, UAE, Russia also contribute
OPEC+ announced a surprise oil production cut that will exceed 1 million barrels a day, abandoning previous assurances that it would hold supply steady to maintain a stable market.
That’s a significant reduction for a market where — despite the recent price fluctuations — supply was looking tight for the latter part of the year. Oil futures weren’t trading when the cut was announced on Sunday, but the inevitable price reaction could add to inflationary pressures across the world, forcing central banks to keep interest rates higher for longer and amplifying the risk of recession. Saudi Arabia led the cartel by pledging its own 500,000 barrel-a-day supply reduction. Fellow members including Kuwait, the United Arabia Emirates and Algeria followed suit, while Russia said the production cut it was implementing from March to June would continue until the end of the 2023.
The initial impact of the cuts, starting next month, will add up to about 1.1 million barrels a day. From July, due to the extension of Russia’s existing supply reduction, there will be about 1.6 million barrels a day less crude on the market than previously expected.
| Country | Size of cut (b/d) |
|---|---|
| Saudi Arabia | 500,000 |
| Russia | 500,000 |
| Iraq | 211,000 |
| UAE | 144,000 |
| Kuwait | 128,000 |
| Kazakhstan | 78,000 |
| Algeria | 48,000 |
| Oman | 40,000 |
The move could once again flare tensions between the US and Saudi Arabia, a regional partner whose relationship with President Joe Biden’s administration has been tense. The White House did not immediately respond to a request for comment. NN: These are massive cuts. This is a unfolding story…. More later