Analysts: Saudi Arabia is expected to extend its voluntary oil cut for September - TONTUF Money

Saudi Arabia is expected to extend its voluntary oil cut for September, according to analysts. The cut, which is currently at 1 million barrels per day, was implemented in July to help support oil prices.

There are a number of factors that are likely to lead to Saudi Arabia extending the cut. First, oil prices have been relatively weak in recent months, and the Saudis are likely to want to see prices stabilize before they resume production at full capacity. Second, the global economy is still recovering from the COVID-19 pandemic, and the Saudis may be concerned about a slowdown in demand if they were to increase production too quickly.

Finally, the Saudis are likely to want to maintain their cooperation with OPEC+, the group of oil-producing countries that has been coordinating production cuts since 2016. If Saudi Arabia were to increase production unilaterally, it could lead to a price war with other OPEC+ members.

Of course, there is always the possibility that Saudi Arabia could decide to end the voluntary cut in September. However, given the current state of the oil market, it seems more likely that the cut will be extended.

Here are some of the reasons why Saudi Arabia might extend the voluntary oil cut:

• To support oil prices: The oil market is currently oversupplied, and oil prices have been relatively weak in recent months. The Saudis may want to extend the cut to help support prices and prevent them from falling further.
• To maintain cooperation with OPEC+: The Saudis are a key member of OPEC+, and they have been working closely with other members of the group to coordinate production cuts. The Saudis may want to extend the cut to maintain this cooperation.
• To protect their market share: The Saudis are the world's largest oil exporter, and they have a large market share. They may want to extend the cut to protect their market share from other producers, such as the United States.

Overall, there are a number of reasons why Saudi Arabia might extend the voluntary oil cut. It will be interesting to see what decision the Saudis make in September.