The outlook for the oil market is shrouded in fog, and Saudi Arabia and Russia are once again joining forces to save oil prices, with worrying results for Russia | Saudi Arabia | oil prices
The latest plan by Saudi Arabia and Russia to jointly boost oil prices has not been effective. In the face of foggy demand, international oil prices fell on Monday, quickly erasing the brief increase after Saudi Arabia announced an extension of production cuts.
On July 3rd, Saudi Arabia's official news agency cited the country's Ministry of Energy as saying that Saudi Arabia has decided to extend its voluntary production reduction plan of 1 million barrels per day, which began in July, by one month. In August, Saudi Arabia's oil production was approximately 9 million barrels per day. According to sources from the Ministry of Energy, this additional voluntary production reduction is aimed at strengthening preventive measures in OPEC+countries, with the aim of supporting the stability and balance of the oil market.
Following closely behind is Saudi Arabia's most important ally within the OPEC+organization. Russian Deputy Prime Minister Alexander Novak has stated that Russia will voluntarily reduce its oil exports by 500000 barrels per day in August to ensure a balanced oil market.
Later that day, the Algerian Ministry of Energy announced that in order to support Saudi Arabia and Russia's efforts to stabilize the oil market, it had decided to reduce an additional 20000 barrels of oil production between August 1st and August 31st.
After Saudi Arabia announced an extension of voluntary production cuts, international oil prices briefly rose, but quickly turned downwards. Because this move is not surprising, facing a lack of market confidence and weak demand, Saudi Arabia has almost no other choice. As of the close on July 3rd, WTI crude oil futures for August delivery fell 1.2% to close at $69.79 per barrel; The Brent crude oil futures for September delivery fell 1.01% to close at $74.65 per barrel. On the morning of the 4th in Asia, two oil companies only rose slightly.
At the beginning of the year, the market was generally betting on an increase in oil prices. But in the first half of the year, Brent oil prices actually declined by 11%. Wall Street giants such as Goldman Sachs, Bank of America, JPMorgan Chase, and Morgan Stanley have abandoned their predictions for crude oil prices to return to triple digits and have recently lowered their outlook for this year's oil prices.
Since last year, oil producing countries have repeatedly attempted to boost oil prices by tightening supply, but the results have been minimal, and the surge in oil prices is just a flash in the pan.
Last October, OPEC+announced a reduction of 2 million barrels per day in production quotas for the next 14 months. International oil prices have been stimulated by this and swept away the declining trend, rising by 10% in just a few days.
In April this year, several oil producing countries including Saudi Arabia, Russia, Iraq, and the United Arab Emirates suddenly announced voluntary production reduction plans, which will continue from May to the end of 2023. The sudden joint production reduction injected a boost into the sluggish oil market caused by the banking crisis. The next day in Asian morning trading, the two major crude oil futures contracts opened up 7%, and Brent crude oil jumped to $85 in one fell swoop.
After the above gains were smoothed out, in early June, Saudi Arabia decided to take another step back, sacrificing more domestic production in July to stabilize the market and shoulder the banner of reducing production alone. But due to economic concerns overshadowing the impact of supply cuts, oil prices remained calm.