Saudi Arabia to Cut Oil Production by 1 Million Barrels per Day to Boost Prices

Saudi Minister of Energy Prince Abdulaziz bin Salman al-Saud arrives for the 186th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna, on June 3, 2023. Joe Klamar/AFP via Getty Images

OPEC countries and their partners, known as OPEC+, showed their commitment to higher oil prices at their meeting in Vienna on June 4.

Following their meeting, OPEC+ members extended their voluntary supply cuts until the end of 2024, which were first announced in April and were supposed to expire at the end of 2023, according to the Saudi Press Agency, the official news agency of the kingdom.

In addition, the Saudi Arabian Ministry of Energy announced that beginning in July, the country will implement a further voluntary cut in its crude production, amounting to 1 million barrels per day (bpd). This additional output cut can be prolonged beyond July, the news agency reported. As a result, Saudi Arabia’s output will be reduced to 9 million bpd in July, and its total voluntary cut will be 1.5 million bpd.

The decision comes after the OPEC+ crude oil producers announced surprise additional production cuts of about 1.16 million barrels bpd in April.

The weekend meeting of OPEC+ was one of the most heated in recent years. Tensions are rising between Saudi Arabia and Russia, two of the world’s largest oil producers, over output limits, according to The Wall Street Journal. That report stated that Russia continues to push massive amounts of cheaper oil into the market, undercutting Saudi Arabia’s efforts to boost oil prices.

OPEC+, which includes 23 oil-producing countries, accounted for about 60 percent of global oil production in 2022.

These production cuts have been a major source of concern for the Biden administration, since they may eventually harm U.S. consumers by increasing inflationary pressures, particularly at the gas pump.

On June 2, White House press secretary Karine Jean-Pierre declined to comment on the OPEC+ meeting, stating, “We'll all see what comes out of those discussions.”

According to AAA data, the national average gasoline price was $3.553 per gallon on June 4, down around 2.5 cents and $1.27 from one week ago and one year ago, respectively.

Oil prices spiked to more than $80 per barrel in April after the decision by OPEC+ to cut production, but have since reversed course, plunging to about $70 per barrel.