Saudi Arabia and Russia cutting oil production will cause significant supply shortages

Saudi Arabia and Russia cutting oil production will cause significant supply shortages

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2023-09-13 | 06:43

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Saudi Arabia and Russia cutting oil production will cause "significant supply shortages"

The International Energy Agency (IEA) stated on Wednesday that the oil production cuts by Saudi Arabia and Russia, within the framework of "OPEC+," will result in a "significant" shortage in global supplies until the end of the year, exacerbating market volatility risks.

The announcement came in the agency's monthly report on the markets, just a day after oil prices surged significantly following updated data released by OPEC, indicating that the gap between global supply and demand will be the widest since 2007.

In an effort to support oil prices, Saudi Arabia and Russia had earlier this month announced their voluntary extension of production cuts until the end of the year.

The agency, headquartered in Paris, stated, "Starting from September, the production cut by OPEC+ led by Saudi Arabia will lead to a significant supply shortage in the fourth quarter."

It added that "oil inventories will be uncomfortably low, increasing the risk of another wave of volatility that will not be in favor of producers or consumers, given the fragile economic reality."

This assessment from the IEA underscores the challenges facing global oil markets as major producers continue to limit production in