Saudi Arabia and Russia announce new oil cuts

Major oil hubs Saudi Arabia and Russia announced oil supply cuts in what Saudi Arabia described as an attempt to “stabilize markets.”

Saudi Arabia’s move was announced in the state-run Saudi Press Agency, which said that the kingdom will extend July cuts of 1 million barrels per day into August. For that month, Saudi Arabia is expected to produce 9 million barrels.

The state news agency cited a source who described the cuts as having the goal of “supporting the stability and balance of oil markets.” The cuts could drive up oil prices, which oil producers like Saudi Arabia may benefit from.

Russia will also cut its exports of the fuel. 

“Within the efforts to ensure the oil market remains balanced, Russia will voluntarily reduce its oil supply in the month of August by 500,000 barrels per day by cutting its exports by that quantity to global markets,” Russia Deputy Prime Minister Alexander Novak said, according to Reuters. Novak’s office declined to tell the news outlet whether its oil production would be cut, or only its exports. 

The Saudi cuts are an extension of prior cuts announced for July that were expected to raise fuel prices in the U.S. and other countries.

Over the course of the past month, prices for international benchmark Brent crude have hovered between $70 and $80 per barrel, down from as high as $87 per barrel in April. 

As part of their sanctions against Russia in light of its invasion of Ukraine, many western countries — including the U.S. — have barred imports of Russian oil.

Meanwhile, the G7, the European Union and Australia have imposed a de facto price cap on Russian oil that is transported by sea by restricting access to services such as insurance for Russian oil that’s sold above a certain price point.