Top oil exporters Saudi Arabia and Russia have officially announced their commitment to continue their additional voluntary oil production cuts until the end of the year due to ongoing concerns regarding demand and economic growth that continue to exert pressure on global crude oil markets.
Both nations have revealed that they will reevaluate these production cuts in the coming month, with the possibility of extending, deepening, or increasing them depending on market conditions.
Saudi Arabia has affirmed that it will maintain its extra voluntary reduction of 1 million barrels per day (bpd), which translates to a production level of approximately 9 million bpd for December, according to a statement from the Ministry of Energy.
The statement quoted a source as saying, “This additional voluntary cut is aimed at reinforcing the precautionary measures taken by OPEC+ countries to support the stability and equilibrium of oil markets.”
Following Saudi Arabia’s declaration, Moscow has also committed to extending its extra voluntary supply cut of 300,000 bpd for its crude oil and petroleum product exports until the end of December.
The OPEC+ alliance, composed of member countries from the Organization of the Petroleum Exporting Countries (OPEC) and key allies like Russia, has been implementing production cuts since the previous year as a preemptive measure to ensure market stability.
While oil prices reached a 2023 peak in September, reaching nearly $98 per barrel for Brent crude, they have since softened and are currently trading around $85 per barrel as of Friday.
Despite geopolitical tensions in the Middle East providing some support, concerns over demand have weighed on prices.
Saudi Arabia, being the de-facto leader of OPEC, initially initiated the voluntary production cut in July as an additional measure to complement the broader supply-limiting agreement that was initially reached by select OPEC+ members in April.
In September, the kingdom announced an extension of its voluntary cut until the year-end, with plans to review the decision on a monthly basis.
Analysts had widely anticipated Saudi Arabia’s confirmation of the extension for December.
Furthermore, an OPEC+ decision made in June has already constrained oil supply into 2024.
The alliance is scheduled to convene once again on November 26 in Vienna to assess the evolving market conditions.