Please ensure Javascript is enabled for purposes of website accessibility

Saudi Arabia Moves to Bolster Oil Prices With Further Cut, Says Report

By Howard Smith - May 11, 2020 at 12:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The kingdom says it is going to cut production by an additional million barrels a day.

Saudi Arabia has announced further oil production cuts that will reduce its output to the lowest level in 18 years, according to a Bloomberg report. The 1 million barrel a day cut is in addition to output cuts previously announced based upon an agreement among OPEC members and other allies. In April, Saudi officials said the nation was producing oil at a rate of 12.3 million barrels per day. With all the announced cuts, oil output will fall to about 7.5 million barrels a day. The oil production cuts are an attempt to stabilize the market and raise prices. 

This level of production is Saudi Arabia's lowest since 2002, according to the report. Saudi Oil Minister, Prince Abdulaziz bin Salman, said "We have to be ahead of the curve. The voluntary cuts will further expedite the rebalancing process."

Saudi Arabian oil field

Image source: Getty Images.

The Kingdom of Saudi Arabia has also announced spending cuts in the midst of the recent oil price crash. Measures imposed have included cuts to benefits for millions of public employees and tripling the country's value-added tax. 

In recent days, President Trump reportedly spoke with Saudi King Salman, with the leaders agreeing "on the importance of stability in global energy markets." Oil Minister Prince Abdulaziz said that he was seeing signs of demand firming as COVID-19 mandated lockdowns have begun to ease. Demand for gasoline was increasing, he believed, because people began driving more. "People feel better to use their cars than public transportation," he said.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.