Saudi Arabia:-

Oil prices surged by over $1 per barrel on Monday as Saudi Arabia announced plans to cut production by an additional 1 million barrels per day from July. This unexpected decision countered macroeconomic challenges. Brent crude futures rose 2% to $77.64 a barrel, while US West Texas Intermediate crude climbed 2% to $73.15 a barrel. 

This voluntary cut complements a broader agreement by OPEC and allies to limit oil supply until 2024, currently implementing cuts of 3.66 million barrels per day, 3.6% of global demand. 

Analysts anticipate the additional reduction will deepen the market deficit to over 3 million barrels per day in July, potentially driving prices higher.

The decision surprised markets as the most recent quota adjustment had only been in effect for a month. Goldman Sachs analysts consider the outcome "moderately bullish," predicting December 2023 Brent prices could rise by $1 to $6 per barrel if output remains at 9 million barrels per day for six months.

However, some cuts will have a limited impact as targets were adjusted for Russia, Nigeria, and Angola. The UAE's output targets were increased by 200,000 barrels per day to 3.22 million barrels per day at the expense of African nations, which had their unused quotas reduced.

In the US, the number of operating oil rigs dropped to its lowest level since April 2022 due to weaker Prices, higher costs, and companies prioritizing shareholder repayments over drilling activities. A tighter oil supply is expected, stimulating the industry.

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