Saudi Arabia, Russia Deepen Oil Supply Cuts — Defying US Calls: Reuters

In a show of continued cooperation, Saudi Arabia and Russia, two of the world’s largest oil exporters, have deepened oil supply cuts in an effort to bolster flagging prices, Reuters reports.

Strengthened Alliance

The move is part of the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, responsible for around 40% of the world’s crude.

Despite the cuts, benchmark Brent futures remained almost flat at $76.30 per barrel, falling short of the $80-$100 per barrel that most OPEC nations require to balance their budgets.

Rebuffing US Calls

The United States, the largest oil producer outside of OPEC+, has repeatedly urged the group to increase production to aid the global economy.

However, Saudi Arabia has consistently dismissed these calls. Saudi Energy Minister Prince Abdulaziz bin Salman stated that the new joint oil output cuts agreed by Russia and Saudi Arabia this week have once again proven skeptics wrong.

“It is quite telling seeing us on Monday coming out with not only our (oil cut) extension… but also with validation from the Russian side,” said Prince Abdulaziz.

Future Market Outlook

Despite the International Energy Agency’s prediction of a tightening oil market in the second half of 2023 due to OPEC+ cuts, analysts at Morgan Stanley have reduced their oil price forecast.

They anticipate a surplus in the first half of 2024, with non-OPEC supply growing faster than demand. However, the United Arab Emirates energy minister, Suhail Al Mazrouei, expressed confidence that additional oil cuts should be sufficient to balance the oil market.

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