Saudi Arabia’s Extra Oil Cut to Last Two Months, Minister Says

(Bloomberg) -- 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 Organization of Petroleum Exporting Countries plus non-members including Russia, is already idling just over 7 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 a day after the kingdom and three other Arab states restored ties with Qatar, ending a three-year rift.

RBC Capital Markets LLC 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 U.S. administration -- past, present and the future.”

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