Saudi plans new oil cuts as part of OPEC+ deal

Saudi Arabia will pledge new voluntary production cuts as part of a broader OPEC+ deal to curb output, sources told Reuters, as the group faces flagging oil prices and a looming supply glut.

The group, known as OPEC+, reached a deal on output policy after seven hours of talks, the sources said.

Two OPEC+ sources said the group was likely to maintain an existing output agreement for 2023 and make additional cuts in 2024 if new production baselines for members, from which cuts are made, are agreed.

It was not clear when Saudi would start making its voluntary cuts or how much Riyadh and OPEC+ as a whole would cut.

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OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40 per cent of the world's crude, meaning its policy decisions can have a major impact on oil prices.

Since Friday OPEC+, sources have told Reuters that additional production cuts could amount to 1 million barrels per day on top of existing cuts of 2 million bpd and voluntary cuts of 1.6 million bpd, announced in a surprise move in April and that took effect in May.

The April announcement helped to drive oil prices about $9 per barrel higher to above $87, but they swiftly retreated under pressure from concerns about global economic growth and demand. On Friday, the international benchmark Brent settled at $76.

If approved, a new cut would take the total volume of reductions to 4.66 million bpd, or around 4.5 per cent of global demand.

Typically, production cuts take effect the month after they are agreed but ministers could also agree to later implementation.

Last week, Saudi Arabia's Energy Minister Prince Abdulaziz said investors who were shorting the oil price, or betting on a price fall, should "watch out", which many market watchers interpreted as a warning of additional supply cuts.

Western nations have accused OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West has also accused OPEC of siding with Russia despite Western sanctions over Moscow's invasion of Ukraine.

In response, OPEC insiders have said the West's money-printing over the last decade has driven inflation and forced oil-producing nations to act to maintain the value of their main export.

Asian countries, such as China and India, have bought the greatest share of Russian oil exports and refused to join Western sanctions on Russia.

During Sunday's meeting, OPEC's most influential members and biggest Gulf producers led by Saudi Arabia were trying to persuade under-producing African nations such as Nigeria and Angola to have more realistic output targets, sources said.

Nigeria and Angola have long been unable to produce in line with their targets but have opposed lower baselines because new targets could force them to perform real cuts.

By contrast, the United Arab Emirates has demanded a higher baseline in line with its growing production capacity, but that could mean its share in the overall cuts might decrease.

OPEC has denied media access to its headquarters to reporters from Reuters and other news media.