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OPEC+ signaled it will stay the course after group leader Saudi Arabia extended a production cut aimed at shoring up global oil markets.
A monitoring committee composed of the kingdom and other key OPEC+ nations recommended no changes to the coalition’s supply policy during an August 4 online meeting, according to a delegate who asked not to be named because the information was private.
Riyadh announced on August 3 that it will extend a unilateral cutback of 1 million barrels a day into September — and potentially deepen the reduction after that — to support a fragile market. Crude prices are trading near a three-month high above $85 a barrel in London, yet fears over China’s economic rebound cloud the demand outlook.
The committee “will continue to closely assess market conditions” and noted that OPEC+ members are willing “to address market developments and stand ready to take additional measures at any time,” according to a statement on the organization’s website.
Read more: Saudi Arabia Extends 1M-Barrel Oil Cut, Says It Can Be Deepened
Major consuming nations have criticized the Saudis for constricting output when oil markets are already on track to tighten significantly, warning that a renewed inflationary spike would inflict more pain on consumers.
The kingdom is getting some assistance from fellow OPEC+ member Russia, which is finally delivering on pledges to curb its supplies. Moscow announced August 3 it will also continue export restraints into September but taper them slightly to 300,000 barrels a day.
The country is pumping 9.5 million barrels a day now, in line with its pledge to reduce production by 500,000 barrels a day since March, Deputy Prime Minister Alexander Novak said in an August 4 interview with Rossiya 24 TV.
Read more: Sunak Defends U.K.'s Decision to Grant 100 North Sea Oil and Gas Licenses
The global oil market “is quite stable,” and prices are at an “acceptable level,” Novak said.
The current effort is largely confined to the two OPEC+ leaders. Several other nations among the Organization of Petroleum Exporting Countries and its partners are pumping below their assigned quotas and are unable to cut further, plagued by inadequate investment and political instability.
Defending the oil market has come at a cost for the Saudis, requiring them to slash output to a two-year low near 9 million barrels a day. The kingdom suffered the sharpest downgrade to economic growth projections by the International Monetary Fund, which sees the country expanding by just 1.9% in 2023, a fraction of its performance in 2022.
The Joint Ministerial Monitoring Committee will convene again on October 4, according to the statement, while the full 23-nation OPEC+ alliance is due to meet in late November.
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