Saudi Arabia: Riyadh -To bolster falling energy
prices, Saudi Arabia said on Thursday that it will extend its unilateral
production cut of 1 million barrels of oil per day through the end of
September. This decision could result in higher gas prices in the nation.
The other
OPEC+ producers have agreed to extend earlier production cutbacks until next
year, which coincides with the Saudi reduction that started in July.
According to
automobile club AAA, the national average for gas prices in the United States
was $3.82 a gallon on Tuesday, an increase of about 30 cents from a month
earlier. Even if fuel costs now are still significantly lower than they were a
year ago, when they skyrocketed globally in the months after Russia invaded Ukraine, analysts say such a jump is unprecedented.
The
scorching summer of this year, which broke all previous records, also had an
effect, increasing demand for air conditioning and forcing refineries to run at
lower capacity.
In a
statement published by the government-run Saudi Press Agency, the kingdom
announced the extension and cited an unnamed official in the Energy Ministry.
If necessary, the cut "can be increased or deepened," the source
continued.
According to
the official, this additional voluntary cut comes to support the precautionary
measures taken by OPEC+ members to support the stability and balance of the oil
markets.
Analysts
generally predicted the action.
On Thursday, the benchmark Brent crude price was
over $80 per barrel.
A series of
production reductions over the past year have not significantly increased
prices due to weaker Chinese demand and stricter monetary policies intended to
fight inflation. Since late October, Brent has mainly fluctuated between $75 and
$85 per barrel.
To
finance Vision 2030, an ambitious plan to transform the kingdom's economy,
lessen its reliance on oil, and generate jobs for a young population, the
Saudis are especially eager to raise oil prices. The plans include building
a futuristic $500 billion city called Neom, among other significant
infrastructure projects.
As Western
nations have attempted to reduce Moscow's earnings by using a price ceiling,
higher prices would also help Russian President Vladimir Putin finance his
conflict in Ukraine.
Moscow is
compelled by Western sanctions to sell its oil to nations like China and India
at a lower price. The International Energy Agency stated in a report in June
that its expected export revenue decreased by $1.4 billion to $13.3 billion in
May, down 36% from a year earlier.
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