RIYADH: The Saudi Energy ministry announced on Sunday that the Kingdom would continue the voluntary cut of one million barrels per day, which went into implementation in July of 2023 and later extended until the end of December 2023. In a statement, an official source at the ministry, obtained by the Saudi Press Agency (SPA), said the Kingdom’s production in the month of December 2023 will be approximately nine million barrels per day.
The source stated that this decision of voluntary cut would be reviewed next month to consider extending the cut, deepening it, or increasing production. The source also noted that this cut was an addition to the voluntary cut previously announced by the Kingdom in April 2023, which extends until the end of December 2024.
The source confirmed that this additional voluntary cut came to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets.
The International Monetary Fund predicts the kingdom’s GDP will grow just 0.8 percent for all of 2023, down from 8.7 percent last year. Saudi Arabia’s oil cuts were aimed at stabilizing global oil markets, according to Ralf Wiegert, Economics Director for the Middle East and North Africa at S&P Global Market Intelligence.
"In the second quarter of 2023, risks of a global growth slowdown were weighing on oil markets,” Wiegert said. "The Saudi leadership decided to take some supply out of the market to account for those recessionary risks to oil demand.” Phasing out production cuts will largely dictate the Saudi economy’s ability to bounce back, Wiegert said, with cuts expected to end in 2025. Saudi growth would remain sluggish at 1.1 percent in 2024, he added.
While other Gulf states have also come under economic pressure from cuts to oil production, the United Arab Emirates economy has continued to grow. The country’s economy minister said this week that GDP in the UAE grew 3.7 percent in the first half of the year, helped by growth in the non-oil sector. Non-oil revenues are growing at the fastest rate in four years, according to new PMI numbers from S&P. — Agencies