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Russia set to take over Saudi Arabia for top spot in Opec+

Kingdom's latest oil production cut brings it to two-year low of nine million barrels a day, says International Energy Agency
Saudi Arabia has been at the forefront of pushing members of Opec+ to cut production.
Saudi Arabia has been at the forefront of pushing members of Opec+ to cut production (Reuters/File photo)

Russia is set to surpass Saudi Arabia as the largest oil-producing country in the Opec+ alliance, as the kingdom continues cutting crude output, according to the International Energy Agency (IEA).

Riyadh, which has been the de facto leader of the consortium of oil-producing countries, has been slashing its oil output in recent months, as it seeks to put a floor on prices in an attempt to fund an ambitious spending programme at home.

Last week, Saudi Arabia said that a one million barrel oil production cut (which was announced in June) would be extended into August, and could be extended again. The cuts put the country's oil production at a two-year low of nine million barrels a day.

"The Kingdom’s crude output is set to plunge to a two-year low of around 9 mb/d [million barrels a day] in July and August, leaving it trailing behind Russia as the bloc’s top crude producer," the IEA said in a report released on Thursday.

This is the first time the kingdom has fallen below Russia in terms of oil production since early 2022.

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Saudi Arabia has been at the forefront of pushing members of Opec+, a group of oil producers led by Riyadh and Moscow, to cut production in a bid to lift prices which have fallen about 40 percent over the last 12 months.

While Russia and Saudi Arabia are partners in Opec+, their relationship has been shaken up by the war in Ukraine and western sanctions imposed on Moscow.

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Russia has muscled in on Riyadh’s regular markets in Asia with cut-rate crude prices, while the kingdom is selling more in Europe.

Russia, however, has been flooding the market with oil. To make up for western sanctions and entice buyers, it is also selling its crude at a steep discount and muscling into Saudi Arabia's market share in big Asian countries like India and China.

However, Moscow's supply increases appear to be coming to a halt, with Russia last week unveiling an export cut of 500,000 bpd in August "as part of efforts to ensure that the oil market remains balanced".

Russian output appears to be declining, though at a slower pace than Saudi Arabia, the IEA said in its monthly market report.

Saudi Arabia's energy minister, Abdulaziz bin Salman, said the recent decision to prolong oil production cuts along with Russia was in part a move to silence reports of an alleged rift between Moscow and Riyadh.

In May, the Wall Street Journal reported mounting tensions between Saudi Arabia and Russia over oil production.

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