This file photo taken on Dec 11, 2019 shows a view of a refinery at the Jubail Industrial City, about 95 km north of Dammam in Saudi Arabia's eastern province overlooking the Gulf. (PHOTO / AFP)
VIENNA/RIYADH - Saudi Arabia will make a deep cut to its output in July on top of a broader OPEC+ deal to limit supply into 2024 as the group seeks to boost flagging oil prices.
Saudi Arabia's energy ministry said the country's output would drop to 9 million barrels per day (bpd) in July from around 10 million bpd in May, the biggest reduction in years.
It said that the additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.
"This is a Saudi lollipop," Saudi Energy Minister Prince Abdulaziz told a news conference. "We wanted to ice the cake. We always want to add suspense. We don't want people to try to predict what we do... This market needs stabilisation".
Saudi Arabia's energy ministry said that the additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets
OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40 percent of the world's crude, meaning its policy decisions can have a major impact on oil prices.
A surprise decision to cut supply in April briefly sent international benchmark Brent crude around $9 higher, but prices have since retreated under pressure from concerns about the weakness of the global economy and its impact on demand.
On Friday, Brent ended trade for the week at $76.
Saudi Arabia is the only member of OPEC+ with sufficient spare capacity and storage to be able to easily reduce and increase output.
It was able to respond rapidly to excess supply that weakened the market in the early stages of the pandemic in 2020 when the group of producers implemented record output cuts.
In this photo dated Sept 22, 2017, the Organization of the Petroleum Exporting Countries (OPEC) logo is pictured at OPEC's headquarters in Vienna. (PHOTO / AFP)
Extension to end of 2024
OPEC+ has in place cuts of 3.66 million bpd, amounting to 3.6 percent of global demand, including 2 million bpd agreed last year and voluntary cuts of 1.66 million bpd agreed in April.
Those cuts were valid until the end of 2023 and on Sunday OPEC+, in a broader deal on output policy agreed after seven hours of talks, said it would extend them until the end of 2024.
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