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Major oil powers led by Saudi Arabia have announced a surprise production cut of more than 1 million barrels per day, calling it a "precautionary" move aimed at stabilising the market.
- Cuts by Saudi Arabia, Iraq, UAE, Kuwait, Algeria and Oman will top one million barrels per day
- Russia is extending its existing cut of 500,000 barrels per day to the end of this year
- A UAE-based expert said the cuts follow a drop in oil prices triggered by jitters over the banking sector
The reductions, on top of Russia's decision to extend a cut of 500,000 barrels per day until the end of the year, and despite US calls to increase production, risk stoking inflation and pressure to raise interest rates.
Cuts by Saudi Arabia, Iraq, UAE, Kuwait, Algeria and Oman from May to the end of the year will top one million barrels per day -- the biggest reduction since the OPEC+ cartel slashed two million barrels per day in October.
Russia, a leading member of the OPEC+ cartel, said the extension of its production cut was "a responsible and preventive action".
A Saudi energy ministry official "emphasised that this is a precautionary measure aimed at supporting the stability of the oil market", the official Saudi Press Agency said.
The cuts follow a drop in oil prices triggered by jitters over the banking sector, after the collapse of US lender Silicon Valley Bank and UBS's hurried buy-out of troubled rival Credit Suisse, UAE-based oil expert Ibrahim al-Ghitani said.
Brent crude oil prices, trading just below $US80 ($120) a barrel late last week, should bounce to above $US80 as a result of the reductions, he said, calling prices below $US80 "unacceptable" for OPEC+.
"The producing countries adhere to a balancing level that supports their large financial budget this year, and their next economic plans," Mr al-Ghitani said.
AFP