Saudis, OPEC Allies To Decide On Production Cuts As Oil Prices Lag

Saudi Arabia and allied oil-producing countries face a decision on whether to extend production cuts set to expire next month or not.

The move could push oil prices higher as the summer travel season increases demand for fuel and as the US presidential election contest heats up. I Photo: C.Stadler/Bwag Wikimedia Commons

This move could push oil prices higher as the summer travel season increases demand for fuel and as the US presidential election contest heats up, David McHugh reported for the Associated Press (AP).

The full OPEC+ alliance, made up of members of the producers’ cartel and allied countries, including Russia, is holding an online meeting, but the cuts in question concern a smaller group of eight, including the Saudis.

Those countries previously cut some 2.2 million barrels per day to support prices that are weaker than the Saudis and other alliance members would like.

International benchmark Brent has loitered in the $81-$83 per barrel range for the past month. Even the war in Gaza has not pushed prices up toward the $100 per barrel level last seen in September 2022.

Reasons include rising non-OPEC production, higher interest rates, and concerns about demand due to slower-than-desired economic growth in Europe and China.

The Saudis need higher oil prices to fund ambitious plans by Crown Prince Mohammed bin Salman to diversify the country’s economy away from fossil fuel exports. Higher oil prices would also help Russia maintain economic growth and stability as it spends heavily on its war against Ukraine.