The Saudi government's voluntarily reducing its output to nine million barrels per day (bpd) represents significant to support the global market and protect producers and consumers, economic analysts told Asharq Al-Awsat.
The experts emphasized the importance of a unified OPEC+ decision and the voluntary production decline in line with the capabilities of many oil-producing countries.
- Market protection
Advisor and international law professor Osama al-Obaidi told Asharq Al-Awsat that the decision of the OPEC+ group seeks to protect price stability from severe fluctuations that harm producers and consumers alike.
Obaidi said the decision limits the contraction of global economic growth, noting that the extreme price fluctuation leads to a decline in oil production efficiency and consumption.
The expert noted that OPEC+ countries needed to defend their market share and achieve stability.
- Global Economy
Obaidi said that the OPEC+ policy, led by Saudi Arabia, balanced international markets and enhanced the stability of the global economy.
Saudi Arabia's efforts are essential to eliminate extreme fluctuations in the oil market to prevent a decline in global demand and support market stability and balance, said Obaidi.
He indicated that the Kingdom, with its voluntary reduction with the member states of OPEC+, succeeded in reducing price fluctuations and ensured the availability of sufficient supplies to global markets.
- Distributive justice
Economist Fahd bin Jumaa noted that appointing impartial bodies to monitor OPEC+ production is an advanced and unprecedented step that achieves fair distribution of production lines and determines the reduction transparently.
Bin Juma told Asharq Al-Awsat that Saudi Arabia's reduction of its production by one million bpd starting next July confirms the correct outlook for global markets to maintain oil stability.
- Precautionary efforts
An official source in the Saudi Ministry of Energy said that after the OPEC+ meeting, the Kingdom would implement an additional voluntary cut in its crude oil production, amounting to one million bpd, starting in July for a month that can be extended.
The Saudi production will become nine million bpd, and the Kingdom's total voluntary cut will be 1.5 million bpd.
The source explained that the Kingdom's additional voluntary cut reinforces the precautionary efforts made by OPEC Plus countries to support the stability and balance of oil markets.
In addition to extending the existing OPEC+ cuts of 3.66 million bpd, the group also agreed to reduce overall production targets from January 2024 by a further 1.4 million bpd versus current targets to a combined 40.46 million bpd.