Oil prices increased on Monday after Saudi Arabia announced it will reduce production by an additional one million barrels per day starting in July as part of an attempt by OPEC+ producers to support oil prices.
The price of WTI, the US standard, increased by 2.4% to $73.50 as of 5.30 a.m. ET, while Brent crude, the worldwide benchmark, was trading up 2.3% at around $78 per barrel. While the price of petrol at the pump in the US remained steady at $3.55 per gallon of standard unleaded fuel despite an increase in petrol futures of 1.5%.
Its output will drop to nine million barrels per day as a result of the largest production decrease Saudi Arabia has experienced in recent years.
It happened following a gathering of OPEC+, an association of OPEC members as well as Russia and other minor producers, which took place on Sunday in Vienna.
Petrol prices in Europe and the US “could slightly rise, further impacting drivers” over the next summer vacation season, according to Homayoun Falak Shahi, a senior oil analyst at data supplier Kpler.
On February 8, 2023, in the Russian city of Omsk in Siberia, flue gas and steam are seen rising from chimneys and smokestacks of an oil refinery during the setting sun on a chilly day. Alexey Malgavko for REUTERS. Oil exports from Russia have returned to pre-war levels.
A trip on a roller coaster
The White House stated that US authorities are focused on costs for American consumers in response to Saudi Arabia’s move to reduce oil supply.
A White House representative told CNN in a statement: “We are not a party to OPEC+, which makes its own choices. “Price reductions since last year have been significant, and we are focused on prices for American consumers, not barrels.”
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Due in major part to the decline in oil prices, US petrol prices have fallen significantly from a year ago. Brent crude oil prices have practically been slashed in half from reaching a peak of over $130 per barrel in March 2022. The Saudi Arabian oil company Aramco’s industrial park is shown in the June 28, 2021, photo shot in Dammam.
Given a conflict of interest between Saudi Arabia, which needs oil to rise above $80 per barrel to balance its budget, and Saudi Arabia, whose oil exports are subject to a price cap imposed by the G7 over the conflict in Ukraine, analysts had predicted that the group of producers would delay announcing any additional supply cuts until after Sunday.
The energy minister of the country, though, had sparked rumors of a further decrease when he declared last month that he would keep short-sellers, or those who bet that prices will decline, “ouching.”
