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Saudi Arabia Commodities July 2023

Saudi Arabia: OPEC output falls to 22-month low in July; crude prices rise at the fastest rate in 14 months

The OPEC oil basket traded at USD 80.8 per barrel on average during 1–28 July, a 3-month high and up 7.5% from the prior month. The rise was one of the sharpest since the onset of Russia’s invasion of Ukraine, and was largely driven by seasonal demand, lower OPEC output and the prospect of economic stimulus by the Chinese government. Meanwhile, on 28 July, the latest date with data available, the price was 5.0% higher year to date and 22.9% lower year on year.

OPEC pumped 27.34 million barrels per day (mbpd) of crude oil in July, the least since September 2021 and down 0.84 mbpd from June, according to a survey by Reuters. This mostly reflected lower output in Saudi Arabia, which pumped 0.86 mbpd less crude than in the prior month after it announced in June that it would unilaterally cut production in July. The decline meant Saudi Arabia’s production stood at just above 9 mbpd, one of the lowest levels in the past decade.

Crude output will remain weak ahead in Saudi Arabia. The government has committed to extending its 1 mbpd cut until at least August, with an extension until at least September likely. That said, the cut should help maintain a floor under crude prices, helping to bolster public coffers and thus support government spending.

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