On Sunday, Saudi Arabia, joined by Russia and other OPEC+ oil producers, announced they are rolling out voluntary cuts to their oil production. As much as 1.15 million barrels per day will stop being produced, Reuters reported.
The oil cuts are expected to lead to higher gas prices in the United States.
The Saudis and OPEC+ said the oil production cuts are designed to support market stability. The move will dismay the Biden administration, especially considering this is the second output cut these countries have agreed to in the past year.
In October 2022, the OPEC coalition, led by the Saudis and Russians, announced 2 million barrels per day would be cut in production until November 2023.
The White House has called for lower prices for oil to stimulate the economy and also prevent Putin from profiting off of oil sales as the Russia/Ukraine conflict continues. Following the October 2022 cuts, President Joe Biden claimed Saudi Arabia would be facing “consequences.”
Democrat members of Congress also echoed a call for the U.S. to freeze cooperation with Saudi Arabia. Despite the oil cuts, Saudi Arabia has denied explicitly supporting Russia in their Ukraine conflict. However, this move brings the Saudis into a closer alliance with Moscow.
This won’t help inflation. https://t.co/ZuTp91Lnzl
— Diamond Options (@diamondoptions2) April 2, 2023