Saudi Arabia expects agreed upon production cuts to finally bump up oil prices. Now, it has gone and cut another 1 million barrels a day of its own. Image Credit: Bloomberg

Riyadh: Saudi Arabia announced an extra voluntary oil-production cut of 1 million barrels a day, which brings output to its lowest in 18 years as the kingdom tries to prop up a nascent recovery in energy markets. Oil prices, which were down on the day, immediately turned around, with West Texas Intermediate (WTI) futures jumping as much as 3.4 per cent.

Riyadh aims to pump just under 7.5 million barrels a day in June, compared with an official target under the most recent OPEC+ agreement of just under 8.5 million a day. If Saudi Arabia makes good on its pledge, its production will drop to the lowest since mid-2002.

The cut is particularly symbolic as it brings Saudi production below 8 million barrels a day, long seen by many consultants and traders as a red-line the kingdom wouldn't cross. It also signals the urgency felt by Riyadh to stabilize the market as rock-bottom prices force it to impose austerity measures.

"The kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets," an official at the Saudi Ministry of Energy said.