Five industry analysts have together predicted that Saudi Arabia will extend its voluntary crude oil production cut of one million barrels a day (bpd) for its third month, taking it to the end of October.
The country has also curtailed its production as part of the OPEC+ arrangement between oil-producing countries. With this and the voluntary cut, which was originally announced for just one month, Saudi Arabia is now producing just 9 million bpd of crude oil, well below its nameplate capacity. Nevertheless, the country’s government has signalled its willingness to extend and even deepen the production cut if necessary.
Analyst Richard Bronze, who works at the Energy Aspects consultancy firm, said:
“We think Saudi Arabia will extend the cut in full at least through October. The kingdom is adopting a cautious approach after the weakness in oil markets over the first half of the year and will want to see global inventories significantly decline before starting to unwind the additional voluntary cuts.”
A further extension will profit oil majors like BP and ExxonMobil, the makers of the Castrol and Mobil lubricant and grease ranges, because they will benefit from the support for oil prices without having their operations in non-OPEC+ countries limited. The Saudi cut appears to have had a tangible effect on oil prices, given the 15% rise over the past month, but weak Chinese economic data and the prospect of a further interest rate hike in the US have put downward pressure on prices recently.
