Five analysts predict that Saudi Arabia will extend the voluntary oil production cut of one million barrels per day for another month, including September, in order to provide additional support to the market. In June, OPEC+ agreed to continue limiting oil supplies until 2024 and Saudi Arabia committed to a further voluntary cut for July. On July 3, Riyadh announced it would extend the cut for another month, covering August, and added that the extension duration might be increased.
Crude prices have received some support from evidence of dwindling supplies and economic stimulus in China. Brent crude prices surpassed $84 per barrel on Friday after reaching their highest level since April the previous day. Gary Ross, founder of Black Gold Investors and a veteran OPEC watcher, stated, "Considering the initial recovery, I believe they will continue the cut for an additional month and then gradually phase it out over three months, similar to what Saudi Arabia did in 2021." The Saudi Ministry of Energy did not respond to a request for comment.
The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, accounts for nearly 40 percent of crude oil supply worldwide. The alliance has been working to limit supply since late 2022 in an effort to support the market. Another analyst, Giovanni Staunovo from UBS, drew comparisons with Saudi measures to support the market two years ago. Sources in OPEC+ indicated that the announcement of the voluntary Saudi cut for July was unexpected during the OPEC+ meeting in June, as Riyadh did not share many or any details regarding the action with other delegations prior to the meeting. Saudi Energy Minister Prince Abdulaziz bin Salman stated that OPEC+ will continue to surprise the markets and will do "whatever it takes."
