Saudi Arabia, Russia prolong voluntary oil production cuts to end-2023

Saudi Arabia and Russia will extend voluntary oil production cuts—a combined 1.3 million b/d—until yearend 2023, the countries said Sept. 5. The move comes despite a recent rally in the oil market and expectations of tight supply conditions in the coming quarters.

“The Saudis previewed such an outcome last month with their longer, deeper statement but today's move still managed to catch many market participants by surprise. Once again proves that Prince Abdulaziz (Saudi Energy Minister Prince Abdulaziz bin Salman) remains firmly in whatever-it-takes mode,” said RBC Capital Markets analyst Helima Croft.

Saudi Arabia began to voluntarily cut oil production by an additional 1 million b/d in July this year, subsequently evaluating extensions to the reduction plan on a monthly basis. Saudi Energy Minister Abdulaziz bin Salman previously emphasized the nation's commitment to enacting required measures to stabilize the crude oil market. Moreover, it is widely acknowledged that the kingdom relies on oil prices hovering around $80/bbl to sustain its extensive budget and finance economic transformation initiatives.

In response to the news, oil prices surged with Brent crude surpassing $90/bbl for the first time since November 2022.