Saudi Arabia and Russia, the largest oil exporters globally, have intensified their oil supply reductions.
Saudi Arabia said July 3 that it will prolong its voluntary production reduction of 1 million b/d for an additional month to include August and expressed the possibility of extending the reduction even further.
The country, on June 4, committed to reduce its oil output by 1 million b/d for the month of July (OGJ Online, June 5, 2023). This reduction is in addition to the broader OPEC+ agreement aimed at limiting the supply of oil until 2024, as the group endeavors to uplift declining oil prices.
Following Saudi Arabia's declaration, Russian Deputy Prime Minister Alexander Novak stated that Moscow would cut its oil exports by 500,000 b/d during the month of August.
“Within the efforts to ensure the oil market remains balanced, Russia will voluntarily reduce its oil supply in the month of August by 500,000 b/d by cutting its exports by that quantity to global markets,” Deputy Prime Novak said. No information was provided on whether Russian oil output would also decline by the same amount.
Although Novak's statement pertained to exports, Russia earlier this year committed to decrease its oil production by 500,000 b/d based on a February baseline. Russia pledged to sustain the reduced production level until 2024.
The announcements spurred an increase in oil prices, despite the prevailing concerns of a potential global economic slowdown and the likelihood of additional interest rate hikes by the US Federal Reserve.
