Russia, Saudi Arabia continue to tighten oil supply

On November 5, the world's two leading oil exporters, Russia and Saudi Arabia, announced that they would continue to voluntarily reduce production until the end of this year.

Reuters quoted a source from the Saudi Arabian Energy Ministry as saying that the country will still reduce production by another 1 million barrels a day, maintaining output around 9 million barrels a day in December. They are concerned that demand and economic growth will put pressure on the crude oil market.

"The voluntary production cut will reinforce the efforts of OPEC+ (Organization of the Petroleum Exporting Countries and allies) to support the stability and balance of the oil market," the source said.

On the same day, Russian Deputy Prime Minister Alexander Novak also announced a further reduction in exports of 300,000 barrels a day of crude oil and oil products. Russia has maintained this policy since August.

Over the past year, OPEC+ has maintained production cuts to support the market. In October 2022, OPEC+ announced a production cut of 2 million barrels a day - the largest since the pandemic appeared.

In May, Saudi Arabia led a small group in announcing a voluntary cut of another 1 million barrels a day. In July, they reduced their output by another million. From April, Russia also reduced production by 500,000 barrels a day.

According to calculations by consultancy Energy Aspects, the policy of tightening supply has helped Russia and Saudi Arabia earn billions of dollars more from oil sales in the past few months, because the increase in oil prices is enough to compensate for the decrease in exports.

This year, Brent crude oil prices reached their highest level since the beginning of the year at $98 a barrel. However, by November 3, the price was only around $85, despite the ongoing conflict in the Middle East.

The decisions by Saudi Arabia and Russia will be reassessed monthly. Yesterday's announcement was also expected. OPEC+ will hold a policy meeting on November 26 in Vienna, Austria.

Ha Thu (according to Reuters)

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