Saudi Arabia, Others Announces Surprise Crude Production Slash

The kingdom of Saudi Arabia and Russia other members of OPEC+ oil producers, on Sunday, announced a surprise slash on oil production, amounting to about 1.16 million barrels aggregate per day.

Reuters reports that the decision, announced a day before the group's ministerial panel's virtual meeting, is aimed at supporting market stability. It replaces the earlier 2 million barrel per day target already in place and expected to last till the end of 2023.

Oil industry watchers are of the view that crude oil prices may rise up to $80 per barrel following the cut, up from its $70 a barrel last month, which resulted from concerns that global crisis in the global banking sector could affect demand. 

"OPEC is taking pre-emptive steps in case of any possible demand reduction," founder and Director of Energy Aspect, Amrita Sen, told Reuters. 

Sunday's announcement will bring the total volume of cuts by the OPEC group to 3.66 million bpd. The figure, Reuters disclosed, is equal to 3.7% of global crude oil demand.

The voluntary crude oil production slash which begins on Monday will see Saudi Arabia reducing it's production by 500,000 bpd with Russia towing the same line, according to its Deputy Prime Minister. . 

Iraq, Kuwait and Oman agreed to cut production by 211,000 bpd, 128,000 bpd and announced 40,000 bpd respectively while Algeria said its production output will reduce by 48,000 bpd. 

Kazakhstan is expected to reduce production output by 78,000 bpd with Gabon making a voluntary 8,000 bpd cut. 

All OPEC members are not taking part in the voluntary production output slash as a number of them, including Nigeria, are already production below agreed level for reason not unconnected to lack of capacity.