Oil prices spike as Saudi Arabia, Russia agree to extend oil-production cuts through end of 2023

Saudi Arabia and Russia have jointly agreed to extend their voluntary oil production cuts until the end of the year, reducing global oil supply by 1.3 million barrels per day. This decision has driven benchmark Brent crude oil prices above $90 a barrel, a level not seen since November. However, this move is expected to increase inflation and raise costs for motorists at gasoline pumps. It also adds pressure to Saudi Arabia's relationship with the United States, given President Joe Biden's previous warnings regarding cooperation between Saudi Arabia and Russia while Moscow was engaged in the conflict in Ukraine.

Saudi Arabia has indicated its intention to continue monitoring the oil market and take further action if necessary. Russia, on the other hand, has committed to maintaining a 300,000-barrel-per-day production cut. Both countries emphasize the importance of these measures in stabilizing and balancing global oil markets.

The decision has the potential to impact various aspects, including inflation, consumer costs, and energy policies. It could lead to higher gasoline prices, which in turn may increase transportation costs and contribute to rising prices for goods. For Saudi Arabia, higher oil prices are crucial for funding its Vision 2030 plan, aimed at diversifying its economy away from oil dependence.

Source: Associated Press “Oil prices spike as Saudi Arabia, Russia extend 1.3 million barrel a day oil cut through December”