Saudi Arabia’s voluntary output cut led to rise in oil prices, says OIES

Saudi Arabia's Flag.

Oil prices rose since Saudi Arabia's decision to voluntarily reduce production by about one million barrels per day (bpd), despite renewed lockdown measures in many countries, according to a recent report by the Oxford Institute for Energy Studies (OIES).

The institute said that if OPEC+ added 500,000 bpd in February and March, oil prices will be affected and will fall below $50 a barrel, due to the high level of uncertainty on the demand side.

Saudi Arabia surprised the markets with the output cut decision, the research firm added, indicating that with the announcement of the cuts in January, the Kingdom achieved a higher price for its sales.

Expectations were that OPEC + would return to produce about 1.5 million bpd for the markets by April 2021, the report said.

The firm also pointed out that the Saudi decision to reduce production confirms its leadership and willingness to work independently when market conditions require it.

In January this year, Minister of Energy Prince Abdulaziz Bin Salman announced that the Kingdom offered voluntary cuts to its oil production by an additional one million bpd in February and March.