Russia and Saudi Arabia Vow to Extend Oil Production Cuts, Crude Prices Inch Higher

Russia and Saudi Arabia have committed to continuing their oil production cuts throughout the summer, which has led to a slight increase in crude oil prices. Russia plans to reduce its oil production by 500,000 barrels per day starting in August, while Saudi Arabia will extend its production cut of 1.4 million barrels per day.

 

Both countries have emphasized their determination to boost crude oil prices, and they expressed this during a meeting held the previous month. Saudi Arabia has been working persistently to raise oil prices, citing market distortions that have kept prices artificially low. The OPEC+ alliance, with Saudi Arabia as a leading member, aggressively reduced crude oil production last year. Saudi Arabia has also implemented voluntary production cuts this summer to further tighten supply and raise prices.

 

There have been tensions between Saudi Arabia and Russia regarding compliance with promised production cuts. In May, Saudi officials accused Russia of not fulfilling its commitments within the OPEC+ framework, causing oil prices to drop below $81 per barrel, which is an important level for Saudi Arabia's economic sustainability.

 

However, both countries have recently reaffirmed their dedication to increasing oil prices together. In a June meeting, Russian deputy prime minister Alexander Novak stated that Russia would adhere to the 1.4 million barrels per day production cut imposed on OPEC+ members in April. Novak further mentioned that Russia would maintain these production cuts until the end of 2024.