Crude oil prices abruptly increased at the opening of the Asia market as a result of Saudi Arabia’s decision to reduce its production, according to the recent weekly report released by Saxo Bank.
US crude oil contracts (CLN3) rose 4.5% to $75 at the opening of the Asia market on Monday, the highest level since May 2, after Saudi agreed to cut its production by one million barrels per day in July to stabilize the market.
This decision is part of the larger agreement of OPEC+ to restrict production until 2024, as the group seeks to support low oil prices.
Read more: OPEC+ output cut decision major point of interest for GCC equity market investors
The total value of OPEC+‘s current production cuts is 3.66 million barrels per day, equivalent to 3.6% of global demand, including a reduction of 2 million barrels per day agreed upon last year, in addition to the voluntary cut of 1.66 million barrels per day agreed upon in April.
The group agreed on Sunday to further reduce overall production targets as of January 2024 by an additional 1.4 million barrels per day compared to current targets, bringing total production to 40.46 million barrels per day.
However, these targets reflect lower targets for Russia, Nigeria, and Angola to align with current actual production levels.
Although the production cuts align with OPEC’s commitment to supporting oil prices, the impact of a similar move taken in April has completely disappeared due to concerns about the weakness of the global economy and its impact on demand.
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