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Source: Arabian Business News

Kingdom to slash production by one million-barrels-a-day in February and March

Saudi Arabia’s additional million-barrel-a-day oil production cut will last two months, and then the supplies will be returned to the market, the kingdom said.

The extra cutback in February and March - which comes on top of curbs Riyadh is already making with OPEC+ - will end in the same fashion as the supplementary reduction made last summer, Energy Minister Prince Abdulaziz bin Salman said in a Bloomberg television interview on Wednesday.

“We gave the oil industry a wonderful present and a wonderful surprise,” he said. “We’re extending support and help to the industry.”

OPEC+, a 23-nation alliance that spans the Organisation of Petroleum Exporting Countries plus non-members including Russia, is already idling just over seven million barrels-a-day of supply to prop-up a global market ravaged by the pandemic.

Saudi Arabia was completely alone in making the decision to deepen its cut, and didn’t consult with any of its fellow OPEC+ members, according to Prince Abdulaziz.

It would have been “excruciating” for many of them - who have often struggled to implement their agreed reductions - to make a further sacrifice, he said.

The reduction will apply to the producer’s international exports, as well as its domestic sales.

The extra Saudi cut announced on Tuesday came as the kingdom and three other Arab states agreed to restore ties with Qatar, ending a three-year rift.

RBC Capital Markets suggested the new oil policy could have been “intended as an olive branch to Washington” before the arrival of a new president who has threatened a tougher line with Riyadh.

“I fail to see any correlation between the two events,” Prince Abdulaziz said. “We have always been cordial and congenial with any US administration - past, present and the future.”