By Yomna Ehab and Hatem Maher
July 11 (Reuters)
In this rapidly growing global economy, one country’s decision affects another. Saudi Arabia, a country known to be very influential in its dealings, has confirmed something. The country’s energy ministry has agreed and confirmed that it will reduce its oil production to avoid running a loss over time. As the largest oil exporter in the world, it wants to ensure stability so that there are no hiccups along the way. Also, because it still wants and needs to maintain a name for itself, it has to agree with some terms and conditions aligned with oil production and supply.
Saudi Arabia affirms complete adherence to the voluntary OPEC+ goal
Saudi Arabia’s energy ministry said on Friday the kingdom had been fully compliant with its voluntary OPEC+ output target, adding that Saudi marketed crude supply in June was 9.352 million barrels per day, in line with the agreed quota. The statement follows a report this month by the International Energy Agency (IEA), which said that Saudi Arabia exceeded its oil output target for June by 430,000 barrels to reach 9.8 million barrels.
This is compared to the kingdom’s implied OPEC+ target of 9.37 million bpd. OPEC+ decided to stop using IEA data in 2022, in a decision driven by Saudi Arabia. The Saudi Arabia energy ministry said in its statement,
“While production briefly exceeded supply, the additional volumes were not marketed domestically or internationally but redirected as a contingency measure.”
It might seem important, but it plays a significant role
For an average person, this news might not seem quite vital or significant; however, it shapes everything and contributes to the government, corporations, organisations, energy sectors throughout the world, and more. We are talking of oil supply, fluctuations, economies, prices, supply and demand. Therefore, a huge oil hub like Saudi Arabia can reduce these irritating prices by maintaining an OPEC+ output target.
The ministry explained in the statement that the brief excess in production would be redirected as a contingency measure to build domestic inventories, optimise east-west flows and reposition barrels to offshore storage hubs under long-term delivery strategies. The energy ministry statement said,
“The Kingdom reports both production and supply data with full transparency to the OPEC secretariat on a monthly basis.”
“Furthermore, all eight OPEC-designated secondary sources were formally briefed at the beginning of this week regarding the June figures.”
The kingdom intends to maintain its voluntary limit
OPEC+ agreed on Saturday to increase oil production by 548,000 barrels per day in August, surpassing the 411,000-barrel-per-day hikes implemented over the previous three months. The group, which pumps about half of the world’s oil, has been curtailing production since 2022 to support the market. But it has reversed course this year to regain market share, and as U.S.
President Donald Trump demanded that the group pump more to help keep gasoline prices lower. The production boost will come from eight members of the group – Saudi Arabia, Russia, the UAE, Kuwait, Oman, Iraq, Kazakhstan and Algeria. The eight started to unwind their most recent layer of cuts of 2.2 million bpd in April.
Now that it has agreed, Saudi Arabia is showing its care and confidence in stability and maintaining an oil supply for the coming years. This means there is no need to worry about shortages, politics or issues with imports and exports. This is a significant move because this is not only about the kingdom and its local people, but also something that the world is feeding from, which is why we can see how the United States also has a say in what happens and the production quantities. Oil supply is there, guaranteed and readily available when needed.
GCN.com/Reuters.