The Organization of the Petroleum Exporting Countries (OPEC) and its partners, known as OPEC+, showed their commitment to higher oil prices in their meeting on June 4, with Saudi Arabia announcing additional output cuts and some other members extending their voluntary cuts until the end of 2024.
In addition, the Saudi Arabian Ministry of Energy has announced that beginning in July, the country will implement a further voluntary cut in its crude production, amounting to one million barrels per day (bpd). This additional oil cut can be prolonged beyond July, the news agency reported. As a result, Saudi Arabia’s output will be reduced to 9 million bpd in July, and its total voluntary cut will be 1.5 million bpd.
The decision comes after the OPEC+ crude oil producers announced surprise additional production cuts of about 1.16 million barrels per day (bpd) in April.
These production cuts have been a major source of concern for the Biden administration, since they may eventually harm U.S. consumers by increasing inflationary pressures, particularly at the gas pump.
Oil prices spiked to over $80 per barrel in April after a surprise decision by OPEC+ to cut production, but have since reversed course, plunging to around $70 per barrel.
According to media reports, Saudi Arabia, OPEC's de facto leader, has pressed for tighter oil supply during the last meeting in order to raise oil prices. It has requested that smaller African producers lower their quotas, which has been met with opposition from African countries.
According to the IMF's most recent economic predictions, Saudi Arabia requires oil prices of $80.90 per barrel to balance its budget this year.
Following the meeting, Russian Deputy Prime Minister Alexander Novak told the Rossiya-24 TV channel that Russia is honoring its commitments to reduce oil output and that there are no disagreements with Saudi Arabia.
The next OPEC+ meeting will be held on Nov. 26 in Vienna, according to an OPEC statement.