The UAE and Saudi Arabia extended their oil cut production until mid-2024, a move that will surely increase gas prices in the United States.
This Sunday, the United Arab Emirates (UAE) and Saudi Arabia announced in separate statements that they intend to extend their policy of cutting oil productions with the aim of propping up prices for the next half of the year. The two oil-rich countries announced they would extend oil supply cuts until mid-2024. The moves also coincided with Russia revealing plans to further cut its oil output and exports.
“The UAE will extend its additional voluntary cut of 163,000 barrels per day (bpd) for the second quarter of 2024, with production remaining at 2.912 million bpd until the end of June 2024,” said a statement by the UAE’s Ministry of Energy, adding that “this voluntary cut is in addition to the voluntary cut of 144,000 bpd previously announced in April 2023.”
Likewise, the energy ministry of Saudi Arabia said the same day that Riyadh “will extend its voluntary cut of one million barrels per day, which was implemented in July 2023, until the end of the second quarter of 2024.”
The US should expect rising gas prices again!
As a move to rise oil prices worldwide, OPEC+ countries, led by Saudi Arabia, started back in November 2022 voluntary cuts in their oil production totaling about 2.2 million barrels per day for the first quarter of the next year. The move was also a reaction to rising oil outputs by the United States and other non-member producers and worries over demand as major economies grapple with high interest rates. Only two days after Saudi oil cut announcement in November 2022, US gas prices rose 7.6%.
Back then, US President Joe Biden warned that there will be consequences for Saudi Arabia if it continues to keep oil production low. Suggesting that he would soon take action, the Us president promised that he would look to consult with Congress on the way forward.
Russia joined the anti-US oil cut policy!
In a similar move and potentially for similar reasons, Russian also joined the club and its Deputy Prime Minister Alexander Novak said in a statement Sunday evening that Moscow will cut oil production and exports by an additional 471,000 barrels per day in the second quarter of 2024 in coordination with Abu Debi and Riyadh.
Of the 471,000 barrels production cut, oil production will be reduced by 350,000 bpd while exports will be cut by 121,000 bpd in April. In May, the additional oil output cut will stand at 400,000 bpd and exports at 71,000 bpd. In June, all the additional cuts will be from oil output, and the export cut will be made from the average export levels of the months of May and June of 2023,” the statement said.
Back in November last year, Russia had already agreed to voluntarily oil production cut and fuel exports by 500,000 bpd in the first quarter of the year, contributing to the rising gas and energy prices in the US.
