By Rhod Mackenzie
The Saudis themselves will help Russian oilmen become the main producers of oil among the countries participating in the OPEC + agreement, voluntarily reducing its production from July 1 by a million barrels per day.
Last month, Riyadh surprised everyone with an unexpected cut, moreover, voluntary oil production by 1 million barrels per day. This means that the kingdom will pump about 9 million barrels per day until the end of the summer, which is the lowest level of production in two years. This also means, that at least for the time being, Saudi Arabia will for the first time since the beginning of 2022 will cede to Russia the unofficial title of the main producer of "black gold" among the 23 oil-producing countries included in the OPEC + agreement. By the way, if we exclude even deeper declines in oil production during the coronavirus pandemic, then the current level of production in the kingdom will be the lowest since 2011.
Saudi oil production will reduce in July and August to a two-year low of approximately 9 million b/d, making Russia the largest oil producer in the bloc,” the International Energy Agency (IEA) said in a July 13 Oil Industry Report. markets.
The Saudi's first said the million-dollar cut was in effect in July, but last week it extended it into August.
“This additional voluntary cut (in output) is necessary to reinforce the additional efforts undertaken by the OPEC+ countries to maintain stability and balance in the oil market,” the Saudi Ministry of Oil said in a July 3 announcement.
Riyadh took such an unexpectedly radical step because of their desire to raise oil prices or, as the Saudis themselves explain, "to stabilize the market." At the last OPEC summit, the remaining members of the oil cartel, who reduced production in May-December 2023, decided to extend the reductions for the next year.
Literally minutes after Riyadh's announcement to extend production cuts into August, the Russian Deputy Prime Minister Alexander Novak announced that Russia was cutting August exports by half a million barrels a day. He later explained that Russian oil companies should decide for themselves whether to cut their exports or cut production.
Russia will become the main oil producer in OPEC + for the last two summer months, but not in the whole world. This status will be retained by the United States, which, according to the forecast of the Energy Information Administration (EIA), will produce 9.4 million barrels per day in July.
This article originally appeared in Russian at expert.ru