VIENNA — Saudi Arabia’s energy minister defended Riyadh and Moscow’s recent oil cut decisions on Wednesday, despite a muted reception from the market. A small increase in the price of Brent crude was short lived.
On Monday Saudi Arabia and Russia, two of the most powerful members of the Organization of Petroleum Producing Countries (OPEC), announced further production cuts to prop up the market. Riyadh confirmed it would extend its cut of 1 million barrels per day (bpd) through August, while Russia said it would reduce oil exports to 500,000 bpd in August, tightening global supplies.
Although Brent climbed by 2% after the announcements, it fell back down and is still hovering around $75 a barrel. The long-term global economic uncertainty — including China's slow economic recovery from the pandemic and high interest rates — seems to be having more of an effect on investor sentiment than months of cuts. Oil prices have been relatively flat in 2023 and the prolonged low indicates many traders don’t foresee a supply shortage in the near future.
At the OPEC International Seminar in at the 23-member cartel’s headquarters in Vienna on Wednesday, Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud defended the move, saying it was “meaningful” for Riyadh and Moscow to announce the cuts, which were voluntary and not “imposed.” Voluntary cuts do not need to be implemented by all OPEC+ members, nor do they require unanimous approval from the 23 countries.
