Saudi efforts to protect the largest oil producers from shrinking global economic growth
At a time when the Saudi government decided to voluntarily reduce its production by 1.5 million barrels per day to the level of 9 million barrels per day, after the “OPEC Plus” meeting, yesterday (Sunday), in the Swiss capital Vienna, economic analysts pointed out to Asharq Al-Awsat, the importance of the decision. To support global oil markets and protect producers and consumers alike from damages, in addition to limiting the contraction of international economic growth, which in turn confirms the decline in demand for the product.
Experts emphasized the importance of unifying the decision of (OPEC Plus) members and continuing the policy of voluntary reduction and adjusting production lines in line with the capabilities of many oil-producing countries.
Dr. Osama Al-Obeidi, advisor and professor of international commercial law, told Asharq Al-Awsat that the decision of the (OPEC Plus) group came to protect price stability from severe fluctuations that harm producers and consumers alike, and also to limit the contraction of global economic growth that leads to In turn, the volume of demand fell.
And Dr. Al-Obeidi indicated that the extreme fluctuation in prices leads to a decline in the efficiency of oil production and consumption.
And the consultant and professor of international trade law went on: “It is imperative for (OPEC Plus) countries to defend their market share and achieve stability for this market, because the member countries are considered the protectors of the sector, being the largest producers in the world.”
Dr. Al-Obaidi said that the “OPEC Plus” policy, led by Saudi Arabia, was able to achieve balance in international markets and enhance the stability of the global economy.
According to Dr. Al-Obeidi, Saudi Arabia’s efforts are important to eliminate extreme fluctuations in the oil market to prevent a decline in global demand and to support market stability and balance.
And he indicated that the Kingdom, with its policy of voluntary reduction with the member states of “OPEC Plus”, succeeded in reducing price fluctuations and ensuring the availability of sufficient supplies of the product to global markets.
For his part, Dr. Fahd bin Jumaa, an economist, told Asharq Al-Awsat that the appointment of neutral bodies to monitor the level of (OPEC Plus) production is an advanced and unprecedented step that achieves fair distribution of production lines and determines the reduction in a transparent manner.
Fahd bin Juma added that Saudi Arabia’s reduction of its production by one million barrels per day, starting next July, confirms the correct outlook for global markets to maintain oil stability.
An official source in the Saudi Ministry of Energy had stated, yesterday, after the “OPEC Plus” meeting, that the additional voluntary cuts in the country’s oil production by one million barrels per day, will start from next July and for a month that can be extended, so that the Kingdom’s production becomes 9 million barrels per day, despite The Kingdom’s ambitions to reach 13 million barrels per day.
According to the source, Saudi Arabia’s additional voluntary reduction came to reinforce the precautionary efforts made by the “OPEC Plus” countries with the aim of supporting the stability and balance of oil markets.
The Kingdom will implement an additional voluntary reduction in its production of crude oil, amounting to one million barrels per day, starting in July, for a period of one month, subject to extension.
– Ministry of Energy (@MoEnergy_Saudi) June 4, 2023
The “OPEC Plus” countries decided to adjust their production level to 40.4 million barrels per day, starting from January 2024, for a period of one year, and the meeting ended with agreeing to reduce production by 3.66 million barrels per day.