London: World's largest crude oil exporter Saudi Arabia has announced a unilateral production cut of 1 million barrels per day from July. The move is obviously aimed at shoring up oil proces which have been showing a southwrd trend for several months.
Media reported on Monday that in parallel with the Saudi decision, which was taken on its own, other oil-producing countries have also agreed to continued cuts in production to save flagging prices from falling further.
Other oil producers forming a loose collective nicknamed OPEC+, meaning Organisation of Petroleum Exporting Countries and a few non-OPEC producers including mainly Russia, also pledged to keep their production cuts for a further period upto end of 2024.
OPEC+ accounts for around 40 per cent of the world's crude oil and its decisions can have a major impact on oil prices, much more than what OPEC alone would imply.
PTI reported that the decision led to oil prices rising by more than USD 1 a barrel on Monday. Brent crude futures were at USD 77.64 a barrel, up USD 1.51, or 2 per cent, in early morning trade after hitting a session-high of USD 78.73 a barrel.
The seven hour-long meeting on Sunday of the oil-rich nations, led by Russia, came against a backdrop of falling energy prices.
Total production cuts, which OPEC+ has undertaken since October 2022, reached 3.66 million bpd, according to Russian Deputy Prime Minister Alexander Novak, the BBC reported.
OPEC+ had already agreed to cut production by two million bpd, about 2 per cent of global demand.
"The result of the discussions was the extension of the deal until the end of 2024," Novak said.
In April, it also agreed a surprise voluntary cut of 1.6 million bpd which took effect in May, a move that briefly saw an increase in prices but its impact did not last long.
On Sunday, Saudi Energy Minister Prince Abdulaziz bin Salman said the cut of one million bpd could be extended beyond July if needed, the BBC reported.
"This is a Saudi lollipop," he said, in what is seen as a bid to stabilise the market.
(With inputs from PTI and IANS)