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Saudi Arabia Commodities June 2023

Saudi Arabia: OPEC oil output falls further in June, with crude prices roughly stable

The OPEC oil basket traded at USD 75.2 per barrel on average in June, down 0.8% from the prior month. The largely stable reading came as the bullish effect of lower OPEC production was offset by the bearish effect of rising interest rates and disappointing economic data for China. Meanwhile, on 30 June, the latest date with data available, the price was 7.9% lower on a year-to-date basis and 36.1% lower than on the same day last year.

In Saudi Arabia, crude output fell by 0.40 mbpd in June. Meanwhile, the combined crude oil output of OPEC members fell by 0.05 million barrels per day (mbpd) from May to 28.18 mbpd in June, according to a survey by Reuters. This mostly reflected lower output in Iran and Saudi Arabia. Overall, quota-bound OPEC members pumped almost 1 mbpd less oil than targeted in the month.

Crude output will fall further ahead in Saudi Arabia after the government pledged in early June to reduce production by 1 mbpd in July, and after it pledged in early July to extend the cut to at least August. This will knock GDP in the country this year. That said, the production cut should help maintain a floor on crude prices, helping to buoy public coffers and thus support government spending.

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