Opec: Saudi Arabia cuts oil production, oil prices rise – Economy
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The announcement of a significant production cut by Saudi Arabia boosted oil prices at the beginning of the week. Saudi Arabia plans to cut daily production by a million barrels — to its lowest level in several years. “Everything necessary will be done to stabilize this market,” said Energy Minister Prince Abdulaziz bin Salman, referring to the recent fall in prices. Russia promised no further throttling at the weekend during talks within Opec+. The United Arab Emirates secured a higher funding quota for 2024.
On Monday morning, a barrel (159 liters) of North Sea Brent for delivery in August cost 77.03 US dollars. That was 90 cents more than on Friday. The price of a barrel of American West Texas Intermediate (WTI) grade for delivery in July rose 92 cents to $72.66. During the night, the prices had risen even more significantly at times.
The tapering is more of a hedge on the downside than a driver of a sustained rally, said Vivek Dhar, director of mining and energy commodities analytics at the Commonwealth Bank of Australia. The weak economic outlook could definitely come back into focus on the market.
New York oil futures prices fell 11 percent last month as concerns over demand, particularly from China, weighed on the market. Most market observers had expected Opec+ to leave production unchanged. “Saudi Arabia would ideally want prices to be above $80 a barrel,” Vandana Hari, founder of analytics house Vanda Insights, told Bloomberg-TV, referring to Brent oil prices. If the health of the global economy falters, the short sellers “will be back in no time,” she predicts.
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