KUALA LUMPUR – Saudi Arabia’s voluntary oil production cut of an additional one million barrels per day (mbpd) would provide more price support for the local oil and gas (O&G) industry if it is extended to the end of this year, said RHB Research.
The O&G producer made its pledge during the Organisation of the Petroleum Exporting Countries and its allies (Opec+) meeting on Sunday.
In a note today, the research firm said while the meeting’s outcome reiterates Opec+’s commitment to support and provide stability for the O&G market, the impact on the market is expected to be minimal.
“Oil prices have been fairly weak due to the uncertain economic outlook, including weak China economic data and United States’ debt ceiling concerns as well as the strengthening of the US dollar.
“Although Brent crude prices have been averaging below our projected US$85 per barrel in the second quarter of 2023 – a downside risk to our full-year projection – we still expect the oil market to improve in the second half of 2023,” it said.
In Opec’s May monthly report, RHB Research said oil demand is still projected to improve by 2.3 mbpd to 101.9 mbpd in 2023.
“While there is still a risk for such numbers to be trimmed, we believe that Opec+’s influence remains strong and its strategy to protect the oil market via production cuts is still intact,” it said. – Bernama, June 6, 2023
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