Oil prices fell after Saudi Arabia ordered state-owned oil company Aramco to slash production by an additional 1 million barrels per day to ease a global supply glut that has ravaged prices this year.
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The output cut will lower Saudi production by a total of 4.8 million barrels per day from the kingdom’s April level to about 7.5 million barrels per day. Under the OPEC+ agreement, Saudi Arabia agreed to lower production to around 8.5 million barrels per day.
Brent crude, the international standard, fell 4.33 percent to $29.63 a barrel while West Texas Texas Intermediate crude, the U.S. benchmark, was lower by 2.43 percent at $24.14.
“The kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets,” a Saudi energy minister said in a statement.
The world's largest producers last month agreed to historic ouput cuts that would reduce global production by about 20 million barrels per day.
The cuts are aimed at restoring supply and demand imbalances exacerbated by the COVID-19 pandemic and the price war between Russia and Saudi Arabia, which have caused prices to fall by 59 percent this year.