Concerns over economic weakness in the United States have led Saudi Arabia to institute a new round of cuts in its oil production, a move which builds on top of two previous rounds of cuts by OPEC+.
Starting in July, the Islamic nation will reduce its oil output by 1 million barrels per day, news that will surely influence coming talks among OPEC nations to extend the previous rounds of cuts into next year.
Saudi Energy Minister Abdulaziz bin Salman said his nation will do “whatever is necessary” to stabilize the crude market after slumps that have allowed U.S. consumers to fill their tanks at reduced rates. Analysts forecast higher rates at the pump in the near future, according to 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.”
Uncertain demand in the months ahead is not only limited to economic woes in the U.S. but Europe as well. In addition, Saudi Arabia cited a weak economic performance by China as the communist nation works to dig out from under its “zero Covid” policy.
The reduction comes as Americans gear up for the traditionally heavy season of summer driving, something the Republican candidates for president are sure to cite as a hardship resulting from President Joe Biden’s handling of the economy. Polls show the majority of Americans blame Biden for the nation’s ongoing struggles with increasing unemployment and persistent inflation. Another poll, asking which Republican they feel would better handle the economy, gave former President Donald Trump an astonishing 71 percent approval rating, something the frontrunner is sure to tout as he prepares to take on Florida Governor Ron DeSantis and other challengers.