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Saudi Decision Affects Global Market and Petrobras’ PPI
In an unexpected move that promises to alter the global energy landscape, Saudi Arabia announced its decision to cut daily oil production by 1 million barrels starting in July. This step has significant potential to impact fuel prices around the world and may bring new challenges for the newly established Import Parity Price (PPI) policies by Petrobras.
Saudi Production Drops to Lowest Level in Two Years
The initiative, according to the Saudi Ministry of Energy, will result in a daily production of 9 million barrels of oil in July, which represents a considerable drop compared to 10 million barrels in May. This is the lowest production rate in the last two years.
This reduction is voluntary and is one of the main pillars of an agreement sealed with OPEC+, in which oil supply will be limited until 2024. The goal of this strategy is to boost oil prices, as reported by Reuters.
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Saudi Arabia and Russia: Oil Giants in Motion
The Saudi Energy Minister, Prince Abdulaziz, explained that this action is part of a broader strategy to keep the market in suspense. The element of surprise is seen as a tool to stabilize the oil market.
This announcement follows a similar action by OPEC+ which, in April, announced a cut in oil production equivalent to 1 million barrels per day, impacting the market in May.
Now, with the new cut announced by Saudi Arabia and also by Russia, the reduction in July will be even greater. Russia, which had already decreased production by 500 thousand barrels per day from March to June, intends to maintain this measure until the end of 2023.
Saudi Arabia holds the unique ability to easily adjust its production due to its infrastructure and storage capacity, which gives it a strategic position within the OPEC+ group.
The reduction in oil production is expected to exert upward pressure on oil prices. Last Friday (Jun. 2, 2023), Brent oil closed the week priced at US$ 76 (R$ 376.7).
