Saudis Announce Surprise Oil Production Cuts From May Through Rest Of 2023

Saudi Arabia will reduce oil production by 500,000 barrels per day from May until the rest of the year.

Riyadh's move will increase fuel prices, possibly worsen its ties with Washington, and exacerbate inflation, already fuelled by the Ukraine conflict.

The Saudi Energy Ministry said the oil production cuts would be carried out in coordination with some OPEC and non-OPEC members. "OPEC" is short for the Organization of the Petroleum Exporting Countries.

Saudi Arabia called this new cut, which makes up less than 5 per cent of their average 11.5 million barrels per day production in 2022, a "precautionary measure" to stabilise the oil market.

This new reduction follows the one made in October last year, which had angered the Biden administration.

An oil output cut by 2 million barrels per day had come on the eve of the United States midterm elections, greatly impacting gas prices.

In response, President Joe Biden had promised repercussions, while his fellow Democratic lawmakers had suggested halting cooperation with the Saudis.

Oil prices have fallen since the previous cuts. Brent crude, a worldwide benchmark, was about $80 a barrel in the previous week, as opposed to almost $95 a barrel when the earlier cuts were made in October.

Aramco announced $161 billion in profits from last year, setting a new record for the state-run oil giant in Saudi Arabia. Its profits surged 46.5 per cent compared to the 2021 figure of $110 billion.

They plan to enhance production up to 13 million barrels daily by 2027.