Company and Market Update — 05 June 2023

Saudi Arabia announced it will reduce oil production by one million barrels a day to bolster oil prices, following a contentious OPEC+ meeting in Vienna. This decision was part of an agreement which includes quota reductions for several African members starting from next year. The world's second-largest oil exporter, Russia, could potentially see lowered production targets, pending review. However, the UAE will have the opportunity to increase its production.

Despite previous attempts to tighten supplies, oil prices have fallen over the last 10 months. The new reduction, termed a "Saudi lollipop," will lower Saudi Arabia's output to 9 million barrels/day in July, and this might be extended. This measure is seen as a "strong statement" from Saudi Arabia to stabilize the market, as it brings production to a "very low" level for the kingdom, considering we are not currently in a global recession.

The new agreement allows for a potential reduction in Russia's production targets, depending on the outcome of a review by independent specialists. Amidst resistance from some African members to reduce their production baselines, the UAE has negotiated a higher production baseline, reflecting its industry investments. This will result in a production target increase of around 200,000 barrels/day from January to 3.2 million barrels/day. #saudioilproduction #oilprices #opec #energymarket #oilindustry #oilsupply #marketstability #globaloiltrends #fuelmarket #oilquota