Saudi Minister of Energy Prince Abdulaziz bin Salman al-Saud (R) arrives for the 35th OPEC and non-OPEC ministerial meeting in Vienna, Austria, on June 4, 2023.
JOE KLAMAR/AFP via Getty Images
Saudi Arabia said it is cutting oil production to stabilize oil markets.
The move is likely to irk Joe Biden, who has clashed with the Saudis on oil production.
The Saudis have previously worked with Russia to cut production, thus boosting prices.
Saudi Arabia and Russia are working to keep oil prices high in a move that will likely frustrate the US.
On Sunday, the kingdom’s energy minister, Prince Abdulaziz bin Salman al-Saud, said Saudi oil output would be reduced from 10 million barrels to nine million starting in July, Reuters reported.
“This is a Saudi lollipop,” Prince Abdulaziz said. “We wanted to ice the cake. We always want to add suspense. We don’t want people to try to predict what we do… This market needs stabilization.”
His remarks came after a meeting in Vienna, Austria, of Opec+ members, a group of the world’s largest oil producing nations.
Saudi Arabia is the world’s biggest oil producer and most influential member of the group, so has significant power over global oil markets.
Saudi Arabia’s de-facto ruler, Crown Prince Mohammed bin Salman, is seeking to keep oil prices high to fund his ambitions plans to diversify Saudi Arabia’s economy, including the Neom megacity project.
He is steering a more independent path on oil policy for Saudi Arabia than previous rulers, even at the risk of angering Saudi Arabia’s traditional allies the US.
In recent weeks, oil prices have been falling globally, but the move by the Saudis has increased the price of Brent crude, the international oil price benchmark, by 2% to $78.73 a barrell before it dipped slightly again to $77.19.
In the wake of the meeting, Russian Deputy Prime Minister Alexander Novak said that the Kremlin would be keeping in place production cuts of 1.4 million barrels a day in 2024 agreed with other Opec+ members in April. He added that the cut would remain in place until the end of next year, Reuters said.
It is a move likely to inflame tensions between the Saudis and the Biden administration, which has consistently sought to pressure the Saudis not to cut production in a bid to reduce inflation and fears of a global economic slowdown.
Last year, a production cut by the Saudis and Russia just before the US midterm electons provoked a diplomatic spat between Riyadh and the White House, with top Democrats accusing the Saudis of trying to damage Biden politically, and of helping Russia fund its war in Ukraine.
A bipartisan group of US senators in March introduced a bill designed to pressure Opec+ members to stop cutting production.
But Opec+ members have hit back, reported Reuters, saying that Western monetary policies had fueled inflation, forcing oil-producing nations to cut production and maintain the value of their chief export.
The production cut will likely be among the issues discussed when US Secretary of State Anthony Blinken visits Saudi Arabia next week.
But there are signs of tensions within Opec+, The New York Times reported, with some members believing that Russia is secretly boosting oil production in a bid to claim a larger share of the market in countries including India.
It came after many Western countries cut off Russian oil imports to punish the Kremlin for the war in Ukraine.