2023-07-28 17:25:10
Five analysts said that Saudi Arabia is expected to extend the voluntary cut in oil production by one million barrels per day, for another month, to include the month of September, with the aim of providing additional support to the market.
In June, OPEC + agreed to continue to limit oil supplies until 2024, and Saudi Arabia pledged an additional voluntary cut for July.
On July 3, Riyadh said it would extend the cut for another month to include August, adding that the extension might be extended.
Crude prices got some support from evidence of tightening supplies and economic stimulus in China. The price of Brent crude exceeded $ 84 a barrel today, Friday, following hitting its highest level since April, yesterday, Thursday.
“Looking at the initial recovery, I think they will continue to cut for an additional month and then phase it out over three months similar to what Saudi Arabia did in 2021,” said Gary Ross, founder of Black Gold Investors and a veteran OPEC watcher.
The Saudi Energy Ministry did not respond to a request for comment.
In the latest comments from an OPEC member regarding the market, UAE Energy Minister Suhail Al Mazrouei told Archyde.com on July 21 that the current measures of OPEC + are sufficient at the present time to support the oil market, adding that the alliance “only needs a phone call” if No further steps were needed.
The “OPEC +” alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, pumps regarding 40 percent of the world’s crude oil.
The alliance has been limiting supply since late 2022 in an effort to support the market.
Another analyst, Giovanni Stonovo, an analyst at UBS, drew a parallel with Saudi measures to support the market two years ago.
“Looking at what they did in 2021, the 1 million bpd cut was in place for three months before it was cut. Accordingly, they may extend it for another month,” he said on July 25.
However, he added, “There are many factors at the moment, which may continue to influence the decision in the coming days.”
Sources in “OPEC +” said that the announcement of the Saudi voluntary cut for the month of July came as a surprise during the “OPEC +” meeting in June, as Riyadh did not share many details or did not share any details regarding the procedure with other delegations before the meeting.
Saudi Energy Minister Abdulaziz bin Salman said in July that OPEC + would continue efforts to surprise the markets and would do “whatever it takes”.
Three other analysts, Tamas Varga of PVM, Warren Patterson of IN Gate, and Vikas Dwivedi of Macquarie, said they believed the cut would likely be extended into September.
“I think that the Saudi cut will remain in effect throughout September,” Varga said, adding that “maintaining these cuts … will allow, I think, a better idea of how to manage the supply side of the oil equation in the last quarter of the year.”
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