Oil prices rose on Thursday, June 10th, as Saudi Arabia pledged to cut its crude output by 1 million barrels per day in July, on top of a broader deal to limit supply into 2024. The move is part of the producer group’s efforts to boost flagging prices. Brent crude rose 25 cents, or 0.3 percent, to $77.20 a barrel by 1328 GMT. US West Texas Intermediate crude gained 20 cents, or 0.3 percent, to $72.73.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, recently held a meeting where they discussed the current state of the oil market. The meeting was attended by Saudi Arabia, Russia, and other major oil-producing countries. During the meeting, Saudi Arabia announced that it would cut its crude output by 1 million barrels per day in July.
This announcement was welcomed by the market, which had been concerned about oversupply. The move is expected to tighten supply and support prices. In addition to the production cut, there is also growing consensus that the Federal Reserve will skip a rate hike, which could lift oil prices even before falling supply starts draining global oil inventories.
According to Tamas Varga of oil broker PVM, “With the OPEC+ meeting out of the way, focus is now shifting toward the next move the Fed will make when it meets next week.”
The cooperation between OPEC+ has been praised by Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman. During a phone call on Wednesday, they discussed the work of OPEC+ and praised their collaboration. The Kremlin said in a statement that “Both sides praised cooperation within the framework of OPEC+, allowing for the adoption of timely and effective steps to ensure a balance between supply and demand for oil.”
In addition to the production cut, there are also new rules aimed at boosting environmental safety in the UAE. Tougher requirements for some ship insurers covering the UAE ships are aimed at reducing the risk of accidents and oil spills, leading to a safer and more secure marine environment.
The UAE’s Energy and Infrastructure Ministry announced on June 2nd that it would tighten insurance criteria for vessels registered under its flag for insurers that are not part of the leading ship insurers, known as the International Group of Protection and Indemnity Clubs, which cover 90 percent of the world’s ocean-going fleet.
Hessa Al Malek, adviser to the minister for maritime transport affairs, said that “By prioritizing stringent P&I standards, we ensure the safety, financial security, and environmental stewardship of our maritime activities, attracting reputable investors.”
In conclusion, the recent announcement by Saudi Arabia to cut its crude output by 1 million barrels per day in July is expected to tighten supply and support prices. In addition, the cooperation between OPEC+ has been praised by Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman. Finally, new rules aimed at boosting environmental safety in the UAE are expected to reduce the risk of accidents and oil spills, leading to a safer and more secure marine environment.