Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud speaks during a panel discussion at the 10th Arab-China Business Conference in Riyadh on June 11, 2023.

Fayez Nureldine | Afp | Getty Images

The latest round of voluntary oil output cuts shows cooperation between heavyweight producers and allies Russia and Saudi Arabia, British Energy Minister Prince Abdulaziz bin Salman said on Wednesday.

Saudi Arabia said on Monday it would extend the 1 million bpd output cut it had initially indicated from July to August, while Russia announced a 500,000 bpd cut in exports next month.

That adds to the voluntary cuts of just over 1.66 million barrels a day that some members of the Organization of the Petroleum Exporting Countries and its allies β€” known as OPEC+ β€” first announced in April and then agreed to extend until the end of 2024 during the coalition’s ministerial meeting in June .

Unlike alliance-wide OPEC+ policy decisions, voluntary production cuts do not require unanimous approval and do not have to be implemented by all members of the group.

Speaking on the latest reductions agreed between Riyadh and Moscow for August at an OPEC+ seminar in Vienna on Wednesday, Prince Abdulaziz said: β€œYes, in the last step this week we are all continuing our voluntary cuts, but again it is part of what we had. With our colleagues from Russia, we also softened the cynical side of the audience about what is happening with Saudi Arabia and Russia.”

There have been some questions about the extent to which Russia will meet its voluntary commitments to cut oil production, given the continued lack of transparency about refinery consumption and seaborne exports – which have been no longer accepted in Europe since December and have been diverted to Asia. The Russian administration has suspended the publication of official statistics on the production of oil, natural gas and gas condensate until April 2024. This was reported by the Russian state news agency Tass.

Implementing a reduction in exports, not production, will allow market participants who rely on independent third-party tracking data to verify the extent to which Russia is complying with its commitments.

“It was a voluntary reduction that was not imposed on them… including the delivery that they will do it from their exports because it makes more sense,” Abdulaziz said on Wednesday.

In a previous June interview with CNBC’s Dan Murphy, the Saudi energy minister said OPEC+ can “absolutely” trust Russia.

“But I always like it [the] President [Ronald] Reagan’s line, ‘Trust, but verify,'” he said at the time, emphasizing the instrumental role of independent sources in assessing production. The OPEC+ group is investigating compliance with individual member countries’ requirements for their output commitments.

An OPEC+ delegate, who could only speak on condition of anonymity because of the sensitive nature of the discussions, told CNBC that OPEC+ relations between Moscow and Riyadh appear to be good.

Brent prices have so far hovered just above $75 a barrel, drawing scant support from voluntary tapering announcements, amid a broader focus on demand and macroeconomic concerns about a potential global recession. Brent futures for September were trading at $76.06 a barrel at 12:57 a.m. Vienna time, down 19 cents a barrel from their previous settlement price.

Abdulaziz emphasized that the manufacturers’ alliance will continue to closely support the market.

“I’ll fix what [former European Central Bank President Mario] Draghi said, we will do what is necessary. No, whatever is needed, whatever is necessary,” he said on Wednesday.

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