Five analysts predicted that Saudi Arabia will likely extend a voluntary oil production cut of one million barrels per day for a third month in October, amidst uncertainty regarding supplies and the kingdom's aim for further reductions in global stocks. Richard Bronze, an analyst at Energy Aspects consulting, stated, "We believe Saudi Arabia will extend the cut fully into October at least." He added, "The kingdom is adopting a cautious approach after the weakness seen in oil markets in the first half of the year, and it wants to see global stocks significantly decrease before starting to roll back additional voluntary cuts." The Saudi Ministry of Energy has not yet responded to a request for comment.
Traders and analysts noted that China is also drawing down on record inventories that built up earlier this year after rising oil prices prompted refiners in the world's largest oil importer to reduce purchases. Two other analysts, John Evans from PVM Oil Associates and Ole Hansen from Saxo Bank, mentioned that the potential resumption of oil production from the Kurdistan region of Iraq could lead Riyadh to prevent additional supplies from being pumped at this time. Iraq and Turkey held talks this week to resume exports of about 450,000 barrels per day from northern Iraq that Turkey halted in late March, but no agreement has yet been reached.
Baghdad has partially compensated for the loss of northern exports by increasing production elsewhere. In July, it produced 4.2 million barrels per day, according to secondary sources in OPEC, slightly below its quota under the OPEC+ agreement. OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, approved a broad agreement in early June to cut supplies until the end of 2024. At that time, Saudi Arabia announced an additional voluntary cut that brought its oil production to the lowest level in several years at nine million barrels per day. Earlier this month, Riyadh extended the voluntary cut to include September and stated that it could be extended or even increased.
