On Sunday, some major oil producers including Saudi Arabia announced their plan to decrease the amount of oil produced. Starting in May and continuing until 2023, these producers will cut back their production by 1.15 million barrels per day. The Saudi Energy Ministry stated that this decision was made together with some members from OPEC (Organization of the Petroleum Exporting Countries) and outside members in order to make the oil market more stable.
15 million Barrels Cut
This weekend, several big oil producers, including Russia and the United Arab Emirates (UAE), will reduce their oil production. They plan to decrease it by a total of 1.15 million barrels per day.
Saudi Arabia and Russia said they would cut 500,000 barrels per day each while UAE and Kuwait will lower their production by 144,000 bpd and 128,000 bpd respectively.
Last October, oil-producing countries agreed to reduce their production by 2 million barrels each day. The US government was mad about it and said there would be “consequences.” On Sunday, the White House spoke out again and said that they don’t think cutting production is the right thing to do right now.
The spokesperson said that President Biden’s administration will work with oil companies to keep the price of gasoline low for Americans. This comes after various stories over the last week showing that some big countries are paying for things without using American dollars.
Alexander Babakov, who is the deputy chairman of the State Duma, said that countries belonging to BRICS (Brazil, Russia, India, China and South Africa) are discussing about creating their own currency for their group. Also, China and Brazil made a deal recently where they can pay each other with their national currencies when buying Liquefied Natural Gas (LNG).
China is growing very fast, which now makes the “BRICS” group the richest in the world according to their total ‘GDP’ (total money). Meanwhile, countries like Saudi Arabia and other large oil producers think that cutting production will help balance out oil prices. Because of this, they are taking action as a sort of “precaution”.
Oil prices have gone down from $95 a barrel to $80 a barrel even though there were cuts in oil production last October. Democrats wanted to stop buying weapons from Saudi Arabia, bring troops back home, and end the relationship with that country.
Saudi Arabia, and other major oil producers, recently said they will reduce the amount of oil they are producing. Do you think this will cause a big change in global oil prices or the world economy? What do you think about this? Please leave your thoughts in the comments section below.