Saudi Arabia and Russia Extend Voluntary Crude Supply Cuts Until End of Q2

Heavyweight oil producers Saudi Arabia and Russia have announced an extension of their voluntary crude supply cuts until the end of the second quarter. This decision significantly impacts global oil markets and the strategies of the Organization for the Petroleum Exporting Countries and its allies, known as OPEC+.

Saudi Arabia's Voluntary Crude Production Cut

Saudi Arabia will continue its voluntary crude production cut of 1 million barrels per day until the end of the second quarter, according to the state-owned Saudi Press Agency. The country's Ministry of Energy confirmed that Riyadh's crude production will be approximately 9 million barrels per day until the end of June.

Russia's Production and Export Supply Reduction

Russia has also pledged to trim its production and export supplies by a combined 471,000 barrels per day until the end of June. Russian Deputy Prime Minister Alexander Novak stated that Moscow had volunteered to reduce its supplies by a slightly higher 500,000 barrels per day in the first quarter.

Effect on Oil Prices

The recent production cut announcement comes against the backdrop of a fluctuating oil price that has largely fluctuated in a narrow $75 to $85 per barrel interval since the beginning of the year. Despite OPEC+ supply cuts, this stability has been influenced by persistent factors such as Houthi maritime attacks in the crucial Red Sea route and spill-over risk from Israel's conflict with the Iran-backed Palestinian militant group, Hamas, in the Gaza Strip.

Future Policy Negotiations

The next policy negotiations for OPEC+ are scheduled for June. At this point, independent, third-party data providers will have finalized their assessments of group members' production capacity baselines, which determine each country's quota. This assessment is crucial as a higher baseline leads to a higher output limit for producers.