Saudi Arabia and several other oil producers from OPEC+ have agreed to slash their oil production during a meeting over the weekend. The “voluntary decision,” which will cut the output by more than 1 million barrels per day, will remain in place until 2024.
This unexpected move is believed to be aimed at driving the price of crude, which has stumbled to $70 a barrel, its lowest in more than a year. This follows previous cuts by OPEC+ countries in October lowered the oil output by 2 million barrels per day.
“This voluntary initiative is a precautionary measure taken to ensure market balance and comes in alignment with the production cut agreed upon during the 33rd OPEC and non-OPEC Ministerial Meeting (ONOMM), held on 5th October 2022,” Suhail bin Mohammed Al Mazrouei, UAE’s Minister of Energy said in a statement.
The experts are expecting an immediate rise in oil prices as a result of the decision. The price will go up by ”several dollars” as soon as the markets open on Monday, according to oil broker PVM’s Tamas Varga. The total hike could be up to $10 more per barrel in the near future, causing the drivers on the pumps to pay a higher price to fill their tanks as well.