On Sunday, Gulf oil giants Saudi Arabia, the United Arab Emirates, and Kuwait announced a coordinated cut in oil production. The cuts, totaling 772,000 barrels per day (bpd), will take effect from May and last for the rest of the year. Iraq followed suit, while Algeria also announced a “voluntary” cut of 48,000 bpd over the same time-frame.
The countries stated that the cuts are a “precautionary measure” aimed at market stability. A Saudi energy ministry official emphasized that this is a precautionary measure aimed at supporting the stability of the oil market.
The cuts come on top of the oil cartel OPEC’s controversial decision in October to slash production by two million barrels per day, the report said. That reduction, the biggest since the height of the Covid pandemic in 2020, came despite concerns it could fuel further inflation and push central banks to hike interest rates even more.
The announcement of these cuts could have a significant impact on global oil prices, as these countries are major producers and exporters of crude oil. It remains to be seen how other major oil-producing countries will respond to this move and whether they will also consider cutting their production levels.