Oil prices exceeded $90 for the first time in ten months. barrel. The surprise that Russia and Saudi Arabia presented to the West worked, according to the material of the Japanese publication Nihon Keizai.
Earlier, the two largest oil-producing states decided to extend the daily reduction in oil production until the end of this year. Russia – by 300 thousand barrels per day, Saudi Arabia – by a million barrels. Total that’s more than one percent world supply. And this is in addition to the reduction in production by OPEC+ countries.
Most market participants expected that there would be a reduction – but for one month, not three. Literally on the same day as the reduction was announced, the benchmark Brent oil rose in price by two percent.
Higher prices enrich the public finances of oil-producing countries. According to the International Monetary Fund, the oil price at which Saudi Arabia’s budget will be balanced this year is is 80.9 dollars per barrel.
In the middle of the year, the cost remained at $70, and the financial results of the state oil company Saudi Aramco for the period April-June 2023 showed a decrease in net profit by 38% compared to the previous year, according to the material of the Japanese publication (translation by InoSMI).
Of course, an increase in market prices is also beneficial for Russia. Besides, there is also an effect of demonstrating unity with Saudi Arabia, notes Nihon Keizai.
But it is clear that a price exceeding one hundred dollars per barrel is unlikely to leave energy consuming countries indifferent. Especially the United States, where presidential elections will be held next year.
However, Washington’s previous attempts achieve an increase in oil production did not give any results. And it is not at all a fact that this time the Americans will be able to achieve something in this field. Although it can be assumed that the Biden administration will make attempts to reach an agreement with the Saudis.