Saudi Arabia has decided to reduce its oil production for the third time as it is concerned about economic weakness in the United States. This decision is an extension of the two previous rounds of cuts made by OPEC+.
In July, the Islamic nation will decrease its daily oil production by 1 million barrels. This news will likely impact upcoming discussions among OPEC countries about extending their previous production cuts into next year.
The Saudi Energy Minister, Abdulaziz bin Salman, stated that his country will take any required actions to stabilize the crude oil market. Recently, the drop in oil prices has allowed U.S. consumers to purchase oil at lower rates. Analysts predict that there will be an increase in oil prices soon, as reported by the Associated Press.
The move provides “a price floor because the Saudis can play with the voluntary cut as much as they like,” said Jorge Leon, senior vice president of oil markets research at Rystad Energy. “Gas is not going to become cheaper. If anything, it will become marginally more expensive.”
Demand in the upcoming months is unpredictable not just in the United States due to economic issues, but also in Europe. Saudi Arabia has also mentioned that China’s economy is weak due to their efforts to recover from their “zero Covid” policy.
As summer driving season approaches, Republican presidential candidates are likely to use the reduction in gas production as an example of how President Biden’s handling of the economy has caused hardship. Polls indicate that most Americans hold Biden responsible for the country’s ongoing challenges with rising unemployment and inflation.
A recent poll asked respondents to choose which Republican candidate they believe would be better suited to handle the economy. President Trump received an impressive 71% approval rating. This is likely to be highlighted by Trump as he prepares to compete against other challengers, including Florida Governor Ron DeSantis.
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