The sudden announcement of the reduction in oil production came despite repeated calls by the United States to increase production, especially with the increase in consumption and the full reopening of economic activities in China, the largest oil consumer in the world, after the closures related to the Covid pandemic.

Edited By |Paul Mitchel

Economic Section 

3 April 2023 - Abu Zabi

        On Sunday, Saudi Arabia led a coordinated reduction in daily production in a number of major oil countries, despite pressure from the United States to increase production, in a move considered a "precautionary measure" to achieve "stability and balance" in the crude markets.

And Saudi Arabia, the Emirates, Kuwait, the Sultanate of Oman, and Algeria decided in a coordinated manner to reduce their daily production by a total of more than one million barrels per day, starting from next May until the end of this year, in the largest production cut since the decision of the Organization of Petroleum Exporting Countries and its partners (OPEC Plus alliance) in October. October 2022, by reducing two million barrels per day.

Likewise, Russia, a member of the OPEC Plus alliance, announced that it would extend its crude oil production cut by 500,000 barrels per day until the end of 2023, referring to a "responsible and preventive measure."

The Saudi Press Agency (SPA) quoted an official source in the Ministry of Energy as saying that the move is "a precautionary measure aimed at supporting the stability of oil markets."

This reduction, which came in a series of successive statements from the various concerned countries, is in addition to the reduction announced by the “OPEC Plus” coalition in October 2022, which requires a reduction of two million barrels per day until the end of 2023.

The cut, the largest since the height of the Covid pandemic in 2020, comes despite concerns that it could lead to an increase in inflation and prompt central banks to raise interest rates further.

The official Emirates News Agency (WAM) quoted Suhail Al Mazrouei, Minister of Energy and Infrastructure, as saying, "This voluntary cut is a precautionary measure to achieve balance in the oil market."

Saudi Arabia will reduce 500 thousand barrels per day, Iraq 211 thousand barrels, the UAE 144 thousand barrels, Kuwait 128 thousand barrels, Algeria 48 thousand barrels, and the Sultanate of Oman 48 thousand barrels, according to what each country announced.

The decision came on the eve of the meeting of the Ministerial Oversight Committee of OPEC Plus, Monday, via visual communication techniques, according to what was stated in the UAE statement.

The sudden announcement of the reduction in oil production came despite repeated calls by the United States to increase production, especially with the increase in consumption and the full reopening of economic activities in China, the largest oil consumer in the world, after the closures related to the Covid pandemic.

Ibrahim Al-Ghitani, an energy expert residing in Abu Dhabi, pointed out that the voluntary cuts "come after Brent crude prices reached their lowest levels in two years last March, due to the crisis of some US banks."

"The drop in Brent prices at less than $80 is an unacceptable level for OPEC Plus members," he told AFP, noting that "producing countries adhere to a balancing level that supports their large financial budgets this year and their next economic plans."

Yasar al-Maliki, an analyst specializing in Gulf affairs in the Middle East Economic Survey, said, "The decision was not completely unexpected after the recent decline in (oil) prices, but it also had a surprising effect regarding the size of" the announced cut.

And last month, Jose Fernandez, US Under Secretary of State for Economic Affairs, Energy and the Environment, said, "As the world's economies recover, we will see more consumption. We would like to see supply match demand."

"We would like to see more supply" of crude globally, including from OPEC+, Fernandez said on the sidelines of an energy conference in Houston, Texas.

The OPEC Plus cartel consists of 13 member states of the Organization of the Petroleum Exporting Countries (OPEC) and 11 countries from outside it.

US President Joe Biden has regularly called for an increase in OPEC+ production after Russia's invasion of Ukraine sent crude prices to a record high.

OPEC also raised its forecast for global oil demand for 2023 in February, saying it expects demand to grow by 2.3 million barrels per day to an average of 101.87 million barrels per day this year.

In February, the organization's crude production was, according to Reuters estimates, about two million barrels per day less than February 2019.

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