Saudi Arabia, the world’s largest crude oil exporter, has announced a significant reduction in its oil production in a bid to prop up prices. However, the decision has the potential to anger its long-time ally, the United States, which has been pushing for increased oil production to keep prices low. The move comes amid a global oversupply of oil and a weakened demand due to the COVID-19 pandemic. The announcement has drawn attention to the delicate relationship between the two countries and the economic implications of the decision.
Saudi Arabia has announced that it will reduce its oil production by 500,000 barrels per day from May until the end of 2023, in a move described as a “precautionary measure” to stabilise the oil market. The cuts will be made in collaboration with certain OPEC and non-OPEC members. Experts suggest that the country’s decision to keep oil prices elevated is primarily due to its desire to fund ambitious mega-projects associated with Crown Prince Mohammed bin Salman’s Vision 2030 plan. The move is likely to strain ties with the US, which has previously called for an increase in production. The decision is also expected to result in higher oil prices, which could aid Russia in its war with Ukraine but be detrimental to consumers in the US and elsewhere. Saudi Arabia’s state-run oil giant, Aramco, recently reported record profits for last year of $161bn.
As Saudi Arabia prepares to announce a cut in oil production, the potential for tension with the US looms large. The move could signify a dramatic shift in global oil markets, with repercussions felt in economies around the world. While it remains to be seen how the situation will unfold, one thing is clear: Saudi Arabia is taking a risk, and the world is watching. Stay tuned to BreakingNews.ie for updates and analysis as the story continues to develop.
