LONDON (AP) — Saudi Arabia and Russia are extending cuts in the amount of oil they pump around the world in a bid to boost prices, showing how two of the world’s biggest oil producers are struggling to boost fossil fuel revenues even as they call because it has weakened with the economy.
The move gave a slight boost to oil costs on Monday and comes after the Saudis announced a sharp production cut for July at the most recent assembly of OPEC’s coalition of oil manufacturers, raising fears that gasoline costs for U. S. drivers could start rising.
Saudi Arabia’s Energy Ministry said it would increase by one million barrels based on the daily cut from July to August for “stability and balance in oil markets. “This will keep the Gulf country’s production at nine million barrels a day.
Meanwhile, Russian Deputy Prime Minister Alexander Novak said his country would cut production by another 500,000 barrels in August, according to Russian reports.
The voluntary cuts come on top of previous cuts that the Saudi-led OPEC oil cartel and allied manufacturers led by Russia agreed to increase until next year.
But they have done little to sustainably raise oil prices, helping U. S. drivers fill their tanks profitably during the busy summer travel season and providing consumers around the world with some inflation relief.
The average value of a gallon of gasoline in the U. S. UU. es $3. 53, according to AAA Auto Club, a $1. 28 decline consistent with last year’s gallon.
U. S. benchmark crude The U. S. gained 77 cents on Monday to $71. 41 a barrel, while popular foreign Brent crude gained 70 cents to $76. 11. Both erased some of the gains.
U. S. crude has been depressed for some time and hit $70 a barrel on Friday for the first time in weeks.
The fact that the Saudis felt some other cut was needed underscores the dubious outlook for fuel demand in the coming months, even as it resumes. The United States, for example, saw an all-time record for air passengers on Friday during July 4. weekend.
But economic weakness in the U. S. The U. S. and European trade is causing concern, while China’s rebound from COVID-19 restrictions has been as strong as many expected.
The Saudis want maximum, sustained oil revenues to fund ambitious progression projects aimed at diversifying the country’s economy, while Russia seeks to accumulate profits to pay for its war on Ukraine.
Western sanctions mean Moscow is forced to sell its oil to countries like China and India. Its estimated export earnings fell from $1. 4 billion to $13. 3 billion in May, down 36% from a year ago, the International Energy Agency said in a report last month.
Combined with previous cuts, Russia’s output in August will be reduced by 1 million barrels in line with the day. But Rystad Energy said in June that Moscow had cut output by just 400,000 barrels in May, from the promised million-barrel share.
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