Saudi Arabia, Russia Extend Cuts Until Year End

Saudi Arabia and Russia in a surprise announcement pledged to extend the voluntary cuts to crude production and exports by three months until the end of the year according to Russian Deputy Prime Minister Alexander Novak and the Saudi Press Agency.

• The move exceeded markets expectations as both nations were expected to announce further curtailment to output and exports into October only, as previously cuts have been announced on a month-by-month basis.
• 20 of 25 traders and analysts surveyed by Bloomberg last week had predicted the additional cutback would be continued for one additional month.
• Saudi Arabia said it will prolong its unilateral oil production cut of 1mbpd until the end of the year. This move will hold output at around 9mbpd for the rest of the year. The kingdom plans to review cuts on a monthly basis.
• Russia announced to extend its 300kbpd cuts to crude oil exports by three months until the end of the year, Novak said. Novak did not specify the baseline for cuts in October-December. Moscow previously announced to cut exports in September by 300kbpd against June levels, after having cut exports by 500kbpd in August.
• “The additional voluntary reduction of oil supplies for export is aimed at strengthening the precautionary measures taken by OPEC+ countries in order to maintain stability and balance of oil markets,” Novak said.