Riyadh: Saudi Arabia and Russia said they will stick with oil supply curbs of more than 1 million barrels a day to the end of the year as a rally in prices falters.
The leaders of the OPEC+ coalition announced the plans in separate official statements on Wednesday. Riyadh has slashed crude production by 1 million barrels a day, and Moscow is curbing exports by 300,000 a day, on top of earlier cuts made with fellow OPEC+ nations.
Oil prices surged to almost $100 a barrel in London last week as the two nations choke supplies just as global demand hits records, draining inventories at the fastest pace in years.
But the rally has since cooled, with Brent futures retreating to near $90 on Wednesday amid signs that the price spike is encouraging the Federal Reserve to keep interest rates higher for longer. JPMorgan Chase & Co. says “demand destruction has begun” as fuel costs squeeze consumers.
The two oil allies reaffirmed their plans with identical wording in separate statements, released first on the Saudi Press Agency and then shortly after by Russian Deputy Prime Minister Alexander Novak.
The output curbs are in intended “to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” they said.
Indian Oil Minister Hardeep Puri told Bloomberg TV on Tuesday that oil prices need to fall to levels of around $80 a barrel to be good for the economy. The world’s third biggest oil user is continually telling producing nations that crude is too costly, an official told the Adipec energy conference in Abu Dhabi the previous day.
Meanwhile, US policymakers have signaled that monetary policy may need to remain tight. Federal Reserve Bank of Cleveland President Loretta Mester said the US will likely need to raise rates once more this year, and that rising gas prices resonate strongly with consumers.
The full 23-nation OPEC+ coalition will hold a ministerial meeting on November 26 to review policy for 2024.