Saudi Arabia and Russia are considering an additional reduction in oil production in August, the two most powerful members of OPEC+ announced on Monday to increase the price of the “black gold”.
The state news agency of Saudi Arabia, citing an official source, said that the kingdom would extend in August the production cut of one million barrels per day announced last month for July. The Deputy Prime Minister of Russia and senior energy official Alexander Novak announced a “voluntary” reduction in production in August by an additional 500,000 barrels per day, reports the Financial Times.
Oil prices rose slightly after this announcement by Riyadh and Moscow, and this move by OPEC+ leaders, made outside a formal meeting of the group, came at a time of struggle to increase the price of crude oil, which fell sharply from its peak last year immediately after the start of the war in Ukraine.
After briefly rising above $130 a barrel last March, oil is trading at around $75 a barrel, despite announced output cuts since last October, with traders focusing on high inflation and a potential recession in many large economies.
Higher oil prices needed
Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman is leading Riyadh’s efforts to boost oil prices as the country tries to transform its economy through a massive investment program that calls for high oil revenues to finance it.
Russia also badly needs a higher oil price to finance war operations in Ukraine after losing much of the income from gas exports to Europe. OPEC countries and their allies will meet this week at a seminar in Vienna, and several major news organizations are banned from attending the event.