The Saudis said the 1 million bpd cut is a gift « to support the market » but it looks more like capitulation to a Russian oil ministry that drove a hard bargain.
Saudi Arabia surprised the oil market today when, after a day of tense negotiations with Russia and other oil producers, it announced that it will cut 1 million barrels per day of oil of its own production in the months of February and March. Other OPEC+ producers will continue at current rates, except for Russia and Kazakhstan, which will increase production slightly. The decision looks an awful lot like the kingdom returning to its role as OPEC’s “swing producer.” In this scenario, other countries in the cartel increase their production rates or keep their production rates steady while Saudi Arabia alone decreases its production in order to keep a floor on oil prices.
