Reducing Oil Production: A New Pillar to Support Global Economic Conditions

Saudi Arabia and Arab countries decide to voluntarily reduce oil production to enhance the conditions of oil markets and the global economy. (AP)

In support of the stability of the global oil markets, and the enhancement of the balance between supply and demand, the member of the Organization of Petroleum Exporting Countries (OPEC) and the producing countries within the OPEC+ have decided to implement a voluntary reduction of crude oil production.

Experts described the move, which was adopted by Saudi Arabia and international producers, as a new pillar that takes into account the conditions of the global economy, amid the crises hitting the financial and banking sector.

Dr. Mohammad Al-Sabban, former senior adviser to the Saudi Minister of Energy, told Asharq Al-Awsat that the decision of some members of OPEC+ was not new, as Saudi Arabia had voluntarily reduced its production by one million barrels per day over the past year. The latest move is a proactive and precautionary step by the producing countries that would take in the effects of the reduction until the end of the year.

Al-Sabban stressed the importance of the decision, pointing to the West’s expectations that oil prices will continue to decline, unlike now, with prices reaching $80 per barrel of crude oil.

The OPEC+ alliance is historically successful, and achieves economic stability in the oil markets, he said, adding that the group was also concerned with creating a balance between supply and demand.

Mohammed Al-Qabbani, an energy expert, told Asharq Al-Awsat that the stability of the markets, the continued flow of oil supplies and their balance with demand were the bases of OPEC decisions.

He underlined that Saudi Arabia has always sought to achieve the optimal balance between supply and demand, which in turn contributes to market stability.

He stated that the organization’s decisions differed from one period to another, taking into account all the circumstances surrounding the industry.

“Thanks to these pure and strict technical and administrative decisions, devoid of bias or external agendas, and focused only on market fundamentals, we find that the organization in the past few years has succeeded remarkably in managing markets and protecting them from several crises, benefiting in particular consumers and producers, and the global economy global in general,” Qabbani stated.