As low oil prices are causing a huge pain to Saudi Arabia’s budget and global demand remains weak, the kingdom will voluntarily deepen oil output cuts from June.
The announcement by the kingdom to add 1 million bpd - equal to 1 percent of global supply - to the previously announced cuts follows last week’s phone conversation between US President Donald Trump and Saudi Arabia’s King Salman.
To slash oil output after US producers received heavy pressure due to a collapse in crude prices, Trump had worked last month to persuade Saudi Arabia, fellow OPEC members and Russia.
June’s deeper oil output cuts, according to Saudi Energy Minister, are designed to accelerate draining a global supply glut and rebalancing the oil market. The minister sees signs of picking up demand as countries move to ease movement restrictions which imposed over the past months.
Versus production in April, Saudi Arabia’s total production will be down by around 4.8 million bpd in June due to the new cuts. This will put output at the lowest in almost two decades, at 7.492 million bpd.
Kuwait also announced fresh oil production cuts of 80,000 bpd in June. The UAE also said it would trim another 100,000 bpd in June. Oil prices jumped on the announcements.
