Oil Prices Turn Bullish After Saudi Arabia Pledges Supply Cuts

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Oil Prices Turn Bullish After Saudi Arabia Pledges Supply Cuts

Oil Prices Turn Bullish After Saudi Arabia Pledges Supply Cuts

Saudi Arabia announced more deep production cuts on its oil supply a few days ago. This caused the oil prices to turn higher during the Asian trading session.

In addition, OPEC also agreed to continue with the supply cuts even during the year 2024. This move has also set the stage for higher oil prices even during the next year.

During the OPEC+ meeting, the officials from Saudi Arabia agreed to reduce its oil production by up to 9 million bpd. Earlier, the production cut was estimated to be around 1 million bpd only. The recent production cuts are in addition to the OPEC+ decision to introduce 3.66 million bpd since October 2022.

Oil Production Cuts To Last Till 2024

For now, it appears that the oil production cuts will remain throughout 2023. In fact, there's a good chance that it will stay in place will the end of 2024.

During the meeting, the countries also agreed to reduce their production targets from next year by 1.4 million bpd. According to experts, this move will affect the production targets of Angola, Nigeria, and Russia.

It appears that the recent move by the oil cartel is an attempt to keep the crude prices supported and to maintain their export value. After all, big production of oil will only bring the oil prices down, which isn't in the best interest of oil-producing countries.

After the news, Brent oil futures were trading near $77.66 (a 1.7% increase), while the WTI futures were trading at $73.17 (a 2% increase). But if we look at their value based on this year, the WTI is down 8% while the Brent oil futures are down by 6%.

According to experts, the production cuts announced at the OPEC+ meeting are due to weak oil demand and slow economic growth. In addition, the crude oil market is entering its 5th month of consecutive losses.

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