Saudi Arabia Announces Cut in Oil Production of More Than 1 Million Barrels Per Day; Bold Move Shakes Global Energy Market and Leaves OPEC+ ‘Caught With Its Pants Down’

Surprise Cut: Saudi Arabia Breaks the Stalemate With High Confidence and Unprecedented Victory.

Saudi Arabia has gained more confidence and influence in OPEC+ policies since Crown Prince Mohammed Bin Salman ordered the flooding of oil markets three years ago during a dispute with Russia. The claim was made by Energy Minister Prince Abdulaziz bin Salman in a recent TV interview.

Recall that in March 2020, OPEC+ was in a stalemate with the Kremlin over production cuts in response to the Covid-19 pandemic. While Riyadh wanted to cut production, Russia wanted to wait. Prince Abdulaziz bin Salman stated that when he told the Crown Prince that the cartel had not reached an agreement on quotas, the ruler ordered Saudi Arabia to hit its “maximum production capacity.”

High Confidence

This critical episode gave Saudi Arabia greater conviction to use its status as the world’s largest oil exporter. On April 2 of this year, Saudi Arabia surprised OPEC+ by announcing a production cut of more than 1 million barrels per day, shaking global energy markets. OPEC+ includes members of the traditional Organization of the Petroleum Exporting Countries and Russia, another of the largest sellers of the commodity in the world.

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The minister stated that Saudi Arabia emerged from the stalemate with high confidence and an unprecedented victory. At that time, Prince Abdulaziz warned the Crown Prince that his decision could lead to a “drastic and excessive drop” in prices when the markets opened and Saudi Aramco, the country’s main company in the sector, would need to offer discounts to ensure it had enough buyers. The ruler said to go ahead and open the taps.

Saudi Arabia’s Boldness Worked.

Saudi Arabia’s boldness worked. When OPEC+ met in mid-April of that year, its members agreed to cut 9.7 million barrels per day – just below the initial proposal of 10 million. The minister stated that the decision was not a matter of price, profit, or revenue, but rather a matter of “to be or not to be” and who will be the master of this sector.

Saudi Arabia’s decision to flood the oil markets three years ago during a dispute with Russia gave the country more confidence to be more assertive in OPEC+ policies. The claim was made by Energy Minister Prince Abdulaziz bin Salman, in a recent TV interview. Saudi Arabia surprised OPEC+ on April 2 of this year by announcing a cut