Inspenet, June 30, 2023.
Saudi Arabia, the world’s top oil exporter, has announced that it will cut its crude supplies to the United States as part of a deal with OPEC+ to cap production and stabilize market prices.
The country has taken the initiative to reduce its daily production by 10% starting in July , thus reaching its lowest level since 2011, with 9 million barrels per day. This implies that Saudi Arabia will have less than 6 million barrels per day for its exports, most of this volume destined for Asian countries.
The move could result in further shortages in the market and an increase in oil prices, both of which have seen a significant decline due to the pandemic and the trade war between Russia and Saudi Arabia in early 2020. The reference crude oil price in Europe is currently around 75 dollars per barrel, while in the United States it is around 72 dollars.
Oil supply cuts: a challenge for the United States
The United States could face difficulties in diversifying its suppliers, since some of the main oil-producing countries such as Russia, Iran and Venezuela are under Western sanctions. For this reason, some analysts see this as an optimal opportunity for Riyadh to increase its oil revenue.
The agreement between OPEC+ and its allies, which includes OPEC member countries and Russia, implies a reduction in oil production of 9.7 million barrels per day from May to July 2020, followed by a gradual decrease until April of 2022.
Saudi Arabia has been pressuring other OPEC+ countries to meet their commitments and has urged additional nations to cut their crude supplies. Saudi Energy Minister Abdulaziz bin Salman Al Saud said the decision to cut supply is based purely on economic considerations and is not related to US political pressure.
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