Hoping to drive oil prices back up to $80 per barrel, Saudi Arabia is preparing deeper production cuts this month.
Saudi Arabia plans on lowering oil exports to 7.1 million barrels per day by the end of the month, according to the Wall Street Journal. The Saudi budget does not breakeven unless Brent crude prices average in the mid-$80s per barrel, vastly higher than today’s spot price. The WSJ reports that Saudi Arabia plans on cutting exports 800,000 bpd below November levels, which appears to be a larger reduction than required as part of the OPEC+ agreement.
The news helped push up crude oil prices on Monday. “The market has jumped all over that,” John Kilduff, founding partner at energy hedge fund Again Capital, told CNBC. The Saudis are “just being aggressive about trying to clean up the situation they fell into from oversupplying the market based on the fear of Iran sanctions,” he said.