Saudis and Russians stick with 1 million-barrel oil cut - for now
Saudi Arabia and Russia reaffirmed that they will stick with oil supply curbs of more than 1 million barrels a day until the end of the year as a rally in prices falters.
The leaders of the OPEC+ coalition announced the plans in separate official statements on Wednesday. Riyadh has slashed crude production by 1 million barrels a day, and Moscow is curbing exports by 300,000 a day, on top of earlier cuts made with fellow OPEC+ nations.
Oil pricessurged to almost $US100 a barrel in London last week as the two nations choked supplies just as global demand hits a record, draining inventories at the fastest pace in years.
But the rally has since cooled, with Brent futures retreating to near $89 on Wednesday amid signs that the price spike is encouraging the Federal Reserve to keep interest rates higher for longer. JPMorgan Chase & Co. says “demand destruction has begun” as fuel costs squeeze consumers.
“Market attention has shifted from the focus on the short-term tightness to the implications of interest rates staying higher for longer” and “the subdued macro environment that entails,” said Callum Macpherson, head of commodities at Investec.
The two oil allies reaffirmed their plans with identical wording in separate statements, released first on the Saudi Press Agency and then shortly after by Russian Deputy Prime Minister Alexander Novak.
The output curbs are intended “to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” they said.
Yet OPEC’s own data indicate the measures will leave global markets severely short this quarter, potentially draining inventories by more than 3 million barrels a day — the fastest pace in years.
High prices stand to
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