On Sunday, Saudi Arabia and several major oil producers announced plans to cut oil production by 1.15 million barrels per day from May to the end of 2023. According to the Saudi Ministry of Energy, the move was coordinated with some members of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries as a “precautionary measure” to stabilize the oil market.
Geopolitical implications: the move to cut oil production comes amid shifting alliances and tensions between major players
This weekend, Saudi Arabia and several major oil producers, including Russia, the United Arab Emirates (UAE), Iraq, Kuwait, Oman, and Algeria, plan to cut oil production by1.15 million barrels per day
Saudi Arabia and Russia have announced that they will cut oil production by 500,000 barrels per day (bpd) each, while the UAE and Kuwait will cut production by 144,000 bpd and 128,000 bpd, respectively.
The announcement of the oil superpowers’ decision to cut supplies follows areductionin October. when the oil-producing country announced a production cut of 2 million bpd. At that time, the Biden administration expressed anger and warned of “consequences.”
Onthe day the White Houseresponded to the surprise cut, Biden’s National Security Council spokesman said the U.S. did not believe the production cut was desirable.
The spokesman also said that the Biden administration will continue to work with oil producers to maintain low prices for U.S. gasoline consumers. The news follows several reports last week indicating that several major countries are shifting away from U.S. dollar payments.
According to Aleksandr Babakov, Vice President of the State Duma, the BRICS countries (Brazil, Russia, India, China, and South Africa) will discuss the creation of a new reserve currency for the group of countries. In addition, China recently signed a bilateral agreement with Brazil that allows the purchase of liquefied natural gas (LNG) to be traded in their respective currencies.
Moreover, with China’s rapid growth, the BRICS bloc is now the largest gross domestic product (GDP) group in the world. Saudi Arabia and other major oil producers believe that production cuts will help stabilize the oil market and are being implemented as a “precautionary measure,” according to Riyadh’s Energy Agency.
Data show that despite the oil production cuts in October, the price of Brent crude oil and other oil products per barrel has fallen from $95 to $80. Last October, Democratic policymakers wanted to cuttieswith Saudi Arabia, removeits militaryfrom the region, and endarms sales
What are your thoughts on the implications of oil production cuts by Saudi Arabia and other major oil producers? Do you think it will have a significant impact on world oil prices and economies? Share your thoughts on this subject in the comments section below.
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