Oil producers led by Saudis extended supply cuts amid slack prices

abcnews.go.com:

Saudi Arabia and allied oil producing countries have extended their deep output cuts aimed at supporting slack prices

FRANKFURT, Germany — FRANKFURT, Germany (AP) — Saudi Arabia and allied oil producing countries on Sunday extended output cuts through next year, a move aimed at supporting slack prices that haven't risen even amid turmoil in the Middle East and the start of the summer travel season.

The OPEC+ alliance, made up of members of the producers cartel and allied countries including Russia, extended three different sets of cuts totaling 5.8 million barrels a day.

International benchmark Brent has loitered in the $81-$83 per barrel range for the past month. Even the war in Gaza and attacks on shipping in the Red Sea by Houthi rebels in Yemen have not pushed prices up toward the $100 per barrel level last seen in September 2022. Reasons include higher interest rates, concerns about demand due to slower than desired economic growth in Europe and China, and rising non-OPEC supply including from U.S. shale producers,

Yet 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.

Analysts say the cuts could push oil prices higher in coming months, but much depends on demand for oil going forward. The summer usually sees a spike in demand through the July-September quarter, but uncertainty about demand grows after that.

U.S. motorists have benefitted from weaker oil prices. Gasoline prices have been quiescent recently, averaging $3.56 per gallon last week, a penny less than a year ago.