{"id":5819,"date":"2023-06-05T12:09:53","date_gmt":"2023-06-05T12:09:53","guid":{"rendered":"http:\/\/roydadnaft.ir\/English\/?p=5819"},"modified":"2023-06-05T12:11:07","modified_gmt":"2023-06-05T12:11:07","slug":"oil-rises-on-saudi-plan-to-deepen-output-cuts-from-july","status":"publish","type":"post","link":"https:\/\/roydadnaft.ir\/English\/5819\/","title":{"rendered":"Oil rises on Saudi plan to deepen output cuts from July"},"content":{"rendered":"
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Oil prices rose by more than $1 a barrel on Monday after top crude exporter Saudi Arabia pledged to cut production by a further 1 million barrels per day (bpd) from July to counter macroeconomic headwinds that have depressed markets.<\/p>\n\n\n\n

Brent crude futures were up $1.37, or 1.8%, at $77.50 a barrel by 1100 GMT after touching a session high of $78.73.<\/p>\n\n\n\n

U.S. West Texas Intermediate crude climbed by $1.39, or 1.9%, to $73.13 after hitting an intraday high of $75.06.<\/p>\n\n\n\n

Both contracts extended gains of more than 2% on Friday after the Saudi energy ministry said the kingdom’s output would drop to 9 million bpd in July from about 10 million bpd in May. The cut is Saudi Arabia’s biggest in years.<\/p>\n\n\n\n

The\u00a0voluntary cut\u00a0is on top of a broader deal by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia to limit supply into 2024 as the OPEC+ producer group seeks to boost flagging oil prices.<\/p>\n\n\n\n

OPEC+ pumps about 40% of the world’s crude and has cut its output target by a total of 3.66 million bpd, amounting to 3.6% of global demand.<\/p>\n\n\n\n

“Saudi remains keener than most other members in terms of ensuring oil prices above $80 per barrel, which is essential for balancing its own fiscal budget for the year,” said Suvro Sarkar, leader of the energy sector team at DBS Bank.<\/p>\n\n\n\n

SEB analyst Bjarne Schieldrop said the market reaction on Monday was relatively muted after the previous cut by OPEC+ failed to prop up prices for long.<\/p>\n\n\n\n

“The oil price is ticking carefully upwards today as investors are cautious after having burned their fingers in the (previous) production cut-induced rally to (almost) $90 a barrel, which later faltered.”<\/p>\n\n\n\n

Consultancy Rystad Energy said the additional Saudi cut is likely to deepen the market deficit to more than 3 million bpd in July, which could push prices higher in the coming weeks.<\/p>\n\n\n\n

Goldman Sachs analysts said the meeting was “moderately bullish” for oil markets and could boost December 2023 Brent prices by between $1 and $6 a barrel depending on how long Saudi Arabia maintains output at 9 million bpd over the next six months.<\/p>\n\n\n\n

“The immediate market impact of this Saudi cut is likely lower, as drawing inventories takes time, and the market likely already put some meaningful probability on a cut today,” the bank’s analysts added.<\/p>\n\n\n\n

Many of the OPEC+ reductions will have little real impact, however, as the lower targets for Russia, Nigeria and Angola bring them into line with their actual production levels.<\/p>\n\n\n\n

In contrast, the United Arab Emirates (UAE) was allowed to raise output targets by 200,000 bpd to 3.22 million bpd to reflect its larger production capacity.<\/p>\n

Updated on