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Saudi Arabia, Russia to Continue Voluntary Cuts to Support Oil Market Stability

Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)
Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)
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Saudi Arabia, Russia to Continue Voluntary Cuts to Support Oil Market Stability

Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)
Voluntary cuts to enhance the OPEC+ precautionary efforts to stabilize oil markets. (Asharq Al-Awsat)

Saudi Arabia and Russia have said they were continuing voluntary oil cuts of 1.3 million barrels per day (bpd) to year-end.

Saudi Arabia on Wednesday extended its one million bpd voluntary crude oil production cut until the end of the year 2023.

An official source at the Ministry of Energy announced that the Kingdom would continue with its voluntary oil output cut of one million bpd for the month of November and until the end of the year and that it would review the decision again next month.

The Kingdom’s production for November and December will be approximately 9 million bpd, the ministry said in a statement.

The source also explained that this reduction is in addition to the voluntary reduction that the Kingdom had previously announced in April 2023 and which extends until the end of December 2024.

The ministry source confirmed that this additional voluntary reduction comes to strengthen the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.

Saudi Arabia first implemented the additional voluntary cut in July and has since extended it on a monthly basis.

Saudi Energy Minister Prince Abdulaziz bin Salman, who chairs the Joint Ministerial Monitoring Committee (JMMC), last month said OPEC+ cuts were needed to stabilize the market, and prices were not being targeted.

Deputy Prime Minister Alexander Novak said that Russia will continue the voluntary export cut of 300,000 bpd until the end of December too, as previously announced.

On output, he said: “Next month, a market analysis will be carried out in order to make a decision on whether to deepen the reduction or increase oil production.”

Novak said that joint oil supply cuts by Saudi Arabia and Russia had helped to balance global oil markets.

He also said Russia’s ban on gasoline and diesel exports had had a positive effect on the domestic fuel market.

The JMMC held a meeting via videoconference on Wednesday and made no changes to the group's oil output policy.

“The committee will continue to closely assess market conditions,” noting that the countries “stand ready to take additional measures at any time, building on the strong cohesion of OPEC and participating non-OPEC oil-producing countries.”

“The committee also expressed its full recognition and support for the efforts of the Kingdom of Saudi Arabia aimed at supporting the stability of the oil market and reiterated its appreciation for the Kingdom’s additional voluntary cut of 1 million barrels per day and for extending it till end of December 2023.”

“The committee also acknowledged the Russian Federation for extending its additional voluntary reduction of exports by 300 kbd till the end of December 2023.”

The next meeting of the JMMC 51st is scheduled for November 26.

The global oil market is moving on the right path towards balanced supply and demand, Kuwait’s Oil Minister Saad Al Barrak said on Wednesday.

“The world is required to increase investment in all types of energy sources, including oil, to ensure meeting the needs of growing demand, the recovery of the global economy, and energy security,” Barrak said.

He also praised the decision by Saudi Arabia and Russia to continue voluntary reduction and extending it until the end of this year, pointing to the positive impact on the balance and stability of the oil market.

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US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
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US Economy Grew at Solid 3% Rate Last Quarter, Government Says in Final Estimate

FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - The New York Stock Exchange, at rear, is shown on Sept. 24, 2024, in New York. (AP Photo/Peter Morgan, File)

The American economy expanded at a healthy 3% annual pace from April through June, boosted by strong consumer spending and business investment, the government said Thursday, leaving its previous estimate unchanged.
The Commerce Department reported that the nation's gross domestic product — the nation's total output of goods and services — picked up sharply in the second quarter from the tepid 1.6% annual rate in the first three months of the year, The Associated Press reported.
Consumer spending, the primary driver of the economy, grew last quarter at a 2.8% pace, down slightly from the 2.9% rate the government had previously estimated. Business investment was also solid: It increased at a vigorous 8.3% annual pace last quarter, led by a 9.8% rise in investment in equipment.
The final GDP estimate for the April-June quarter included figures showing that inflation continues to ease, to just above the Federal Reserve’s 2% target. The central bank’s favored inflation gauge — the personal consumption expenditures index, or PCE — rose at a 2.5% annual rate last quarter, down from 3% in the first quarter of the year. Excluding volatile food and energy prices, so-called core PCE inflation grew at a 2.8% pace, down from 3.7% from January through March.
The US economy, the world's biggest, displayed remarkable resilience in the face of the 11 interest rate hikes the Fed carried out in 2022 and 2023 to fight the worst bout of inflation in four decades. Since peaking at 9.1% in mid-2022, annual inflation as measured by the consumer price index has tumbled to 2.5%.
Despite the surge in borrowing rates, the economy kept growing and employers kept hiring. Still, the job market has shown signs of weakness in recent months. From June through August, America's employers added an average of just 116,000 jobs a month, the lowest three-month average since mid-2020, when the COVID pandemic had paralyzed the economy. The unemployment rate has ticked up from a half-century low 3.4% last year to 4.2%, still relatively low.
Last week, responding to the steady drop in inflation and growing evidence of a more sluggish job market, the Fed cut its benchmark interest rate by an unusually large half-point. The rate cut, the Fed’s first in more than four years, reflected its new focus on shoring up the job market now that inflation has largely been tamed.
Some other barometers of the economy still look healthy. Americans last month increased their spending at retailers, for example, suggesting that consumers are still able and willing to spend more despite the cumulative impact of three years of excess inflation and high borrowing rates. The nation’s industrial production rebounded. The pace of single-family-home construction rose sharply from the pace a year earlier.
And this month, consumer sentiment rose for a third straight month, according to preliminary figures from the University of Michigan. The brighter outlook was driven by “more favorable prices as perceived by consumers” for cars, appliances, furniture and other long-lasting goods.
A category within GDP that measures the economy’s underlying strength rose at a healthy 2.7% annual rate, though that was down from 2.9% in the first quarter. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.
Though the Fed now believes inflation is largely defeated, many Americans remain upset with still-high prices for groceries, gas, rent and other necessities. Former President Donald Trump blames the Biden-Harris administration for sparking an inflationary surge. Vice President Kamala Harris, in turn, has charged that Trump’s promise to slap tariffs on all imports would raise prices for consumers even further.
On Thursday, the Commerce Department also issued revisions to previous GDP estimates. From 2018 through 2023, growth was mostly higher — an average annual rate of 2.3%, up from a previously reported 2.1% — largely because of upward revisions to consumer spending. The revisions showed that GDP grew 2.9% last year, up from the 2.5% previously reported.
Thursday’s report was the government’s third and final estimate of GDP growth for the April-June quarter. It will release its initial estimate of July-September GDP growth on Oct. 30.