"Oil Prices Rise" Saudi Arabia and Russia Extend Oil Production Cuts Until June

OPEC Plus Extends 2 Million Barrels Per Day Cut
US Supply Increase and Weak Chinese Demand... Aiming for Oil Price Rise

OPEC+, a major oil-producing coalition led by Saudi Arabia and Russia, which are non-OPEC oil-exporting countries, has decided to extend voluntary crude oil production cuts until mid-year. This measure aims to boost oil prices amid Middle East instability, increased U.S. oil production, and weak demand from China, which have stabilized oil prices.

According to major foreign media including Bloomberg on the 3rd (local time), OPEC+ decided to maintain a daily oil production cut of 2 million barrels until June. Previously, in November last year, OPEC+ agreed to cut production by 2 million barrels compared to the allocated production volume until the first quarter of this year, and this time they extended the cut period.

Alexander Novak, Deputy Prime Minister of Russia, an OPEC+ member country, stated that in the second quarter, they will focus more on production cuts rather than exports to strengthen their role.

The decision by oil-producing countries to cut production is analyzed as an effort to defend oil prices amid increased U.S. oil production and global demand slowdown due to China's economic downturn. Although geopolitical instability in the Middle East is escalating due to the war between Israel and the Palestinian armed group Hamas and the Red Sea crisis, international oil prices are trading around $80 per barrel due to supply expansion. Saudi Arabia and Russia, both needing 'oil money' for development funds and war expenses respectively, are in a position where they must raise oil prices. In particular, Saudi Arabia wants to raise oil prices to around $100 per barrel to secure large-scale development funds. However, U.S. President Joe Biden, who is running for re-election in November, is focusing on stabilizing oil prices to control inflation.

The market is paying attention to the OPEC+ meeting scheduled for June 1. Experts expect OPEC+ to adjust crude oil production policies for the second half of the year.

Amrita Sen, a petroleum researcher at energy consulting firm Energy Aspects, said, "OPEC+ member countries want to supply more crude oil to the market, but that depends on market conditions."

Meanwhile, forecasts for the oil market this year are mixed. The International Energy Agency (IEA) expects oil demand to increase by 1.2 million barrels per day this year, about half of last year's level. On the other hand, OPEC forecasts that oil demand will increase by 2.2 million barrels per day.