Saudi Arabia announced Monday that it would unilaterally cut an extra 1 million barrels of oil production per day from June with the huge burden of low oil prices on the Kingdom's budget and while global demand remains weak due to lockdowns to contain the coronavirus pandemic, according to international media.
Saudi's Energy Minister directed Saudi Aramco to further reduce its output beyond the reductions agreed with OPEC+ countries in April, bringing the Kingdom's total production cut to nearly 5 million barrels a day.
From June, Saudi Arabia, the world's largest oil exporter, will produce only 7.5 million barrels, the lowest in two decades, and well below its capacity of more than 12 million barrels.
Saudi Arabia paved the way for a coordinated move by Gulf OPEC producers to further cut crude production in June beyond their pledges under the OPEC+ deal.
The announcement by Riyadh was immediately followed by commitments from two other Gulf countries. Kuwait said it would slash an additional 80,000 barrels per day, while the UAE said it would cut its oil output by an extra 100,000 barrels per day.
Brent crude jumped to more than $31 a barrel after news of further cuts but fell back again to $29.88 per barrel at 0647 GMT.
Despite the output cuts by Saudi Arabia and other OPEC+ oil-producing countries, crude prices continue to remain low due to coronavirus-related weak oil demand around the world.
By Busranur Begcecanli