Saudi Arabia will extend its oil production cuts for the rest of the year, a move that could keep prices at the pump higher, the kingdom’s state-run press office confirmed Tuesday.
The price of international benchmark Brent Crude was up about $0.96 on Tuesday morning following the news, hitting nearly $90 per barrel.
The cut of a million barrels per day was announced in July and later extended into August and September. The cut will be extended through October, November and December, Riyadh announced Tuesday, with total production of around 9 million barrels per day for the final three months of 2023.
The Saudi cuts are separate from the broader production agenda of the Organization of Petroleum Exporting Countries (OPEC), which has announced it will not make any further cuts for the rest of 2023. Saudi Arabia is the largest single producer of oil within OPEC.
“[T]his additional voluntary comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets,” the Saudi Press Agency said in a statement, referencing the confederation of both OPEC member nations and 10 oil-producing nations that are not members.
The long-term effect of the cuts on gas prices in the U.S. hinges largely on demand. President Biden, after previously sharply criticizing the Saudis’ human rights record, last summer met with Crown Prince Mohammed bin Salman to try to negotiate a production increase. After the appeal was unsuccessful, a number of the president’s allies in Congress called for the U.S. to reevaluate its foreign policy relationship with the kingdom.
In August, the International Energy Agency predicted a surge in overall oil demand, driven by a combination of summer air travel and continual demand growth from China. Despite drops in supply due to OPEC+ cuts, the U.S. has led all nations in production from outside OPEC+ this year, according to the IEA, and non-OPEC+ states will “dominate” supply growth in 2024.