Saudi Arabia cuts oil production again amid economic uncertainty: NPR

Prices are displayed on a gas pump outside a gas station in Washington, DC on June 14, 2022.

Stefani Reynolds/AFP via Getty Images

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Stefani Reynolds/AFP via Getty Images

Prices are displayed on a gas pump outside a gas station in Washington, DC on June 14, 2022.

Stefani Reynolds/AFP via Getty Images

Saudi Arabia announced on Sunday that it would start cutting oil production by one million barrels a day in July to support “stability and balance in oil markets”.

Although the country says it does not use the cost of crude to make oil production decisions, the move is seen as an attempt to support oil prices in response to global economic uncertainty and fears that international demand will decline.

The decision was made at an OPEC+ meeting in Vienna, but the additional cuts announced by Saudi Arabia are being made unilaterally.

Saudi Arabia says the cuts will last at least a month and could be extended.

OPEC+ countries have also agreed to extend the oil production cuts they announced in April until the end of 2024, reducing the amount of crude they pump into the global market by more than one million barrels per day. OPEC+ countries produce around 40% of the world’s crude oil.

There had been pressure on many African countries and Russia to cut production. Meanwhile, the UAE will increase its crude production.

World oil production is around 100 million barrels per day.

Saudi Arabia will now produce 9 million barrels of crude oil per day, the country’s energy ministry has announced. This is 1.5 million barrels less per day than at the start of the year.

The cuts come shortly after Memorial Day in the United States and on the eve of the busy summer travel season. Crude oil prices are closely tied to the cost of gasoline.

Last summer, President Biden visited Saudi Arabia – which he had previously called a “pariah” state – to ask the country’s leaders to increase oil production.

Instead, OPEC+ members in October announced a cut of 2 million barrels a day, a move the White House called “shortsighted.”

The Biden administration has released millions of barrels of oil from the Strategic Petroleum Reserve since last year in an effort to keep gas prices low.