Thomas Lyons 
In a recent announcement, the energy ministry of Saudi Arabia stated that it will reduce its oil production by 500,000 barrels per day from May until the end of 2023. This move is expected to raise oil prices and could further strain relations between Riyadh and Washington, especially as the world grapples with inflation, which has been fuelled in part by the ongoing war in Ukraine. The reductions will be made in co-ordination with some Opec (Organisation of the Petroleum Exporting Countries) and non-Opec members, although the ministry did not name them. This measure is being described as a “precautionary measure” aimed at stabilising the oil market.
This announcement comes in addition to a reduction that was announced last October. It is important to note that Saudi Arabia and other Opec members had already angered the Biden administration last year when they agreed to cut production on the eve of US midterm elections, where inflation was a major issue. Both the US and Saudi Arabia denied any political motives, saying they were focused on maintaining a healthy market price.
The reduction in oil production by Saudi Arabia is expected to have a significant impact on global oil prices. The move comes at a time when the world is already grappling with rising energy costs due to the ongoing conflict in Ukraine, which has disrupted gas supplies to Europe. The decision by Saudi Arabia to cut production is expected to further exacerbate the situation, leading to higher energy prices worldwide.
This move by Saudi Arabia is not without its critics. Some experts have argued that the reduction in production could lead to a shortage of oil in the future, which could further drive up prices. Others have suggested that the move is a political one, aimed at putting pressure on the Biden administration to ease sanctions on Iran, which could increase oil supplies in the market.
It is worth noting that Saudi Arabia is not the only country to have announced a reduction in oil production. Other Opec members, such as the United Arab Emirates, have also announced similar measures. The aim of these reductions is to stabilise the oil market, which has been hit hard by the ongoing Covid-19 pandemic. With many countries still struggling to contain the virus, demand for oil has remained low, leading to a glut in the market.
The decision by Saudi Arabia to cut production is expected to have far-reaching consequences. It is likely to lead to higher oil prices, which could further fuel inflation around the world. It could also lead to a shift in global politics, as countries seek to secure their energy supplies in an increasingly volatile market.
In conclusion, the decision by Saudi Arabia to cut oil production by 500,000 barrels per day from May until the end of 2023 is a significant development that is likely to have far-reaching consequences. It is a move that is aimed at stabilising the oil market, but it could also lead to higher oil prices and further strain relations between Riyadh and Washington. As the world grapples with rising energy costs and inflation, it remains to be seen how this decision will impact the global economy and politics.
