US Newspaper: Russia and Saudi Arabia's strategy to reduce oil production has achieved high results

Saudi Arabia increased its profits by $2.6 billion in the first quarter of 2023, while Russia's profits increased by $2.8 billion, experts say. And this growth will only continue in the future.

The Wall Street Journal reports that in recent months, Russia and Saudi Arabia have been able to significantly increase their oil revenues by cutting production. This strategy is fraught with risks, both financially and politically. In fact, in some cases, reducing supply can lead to a loss of market share, and transfer it to competitors. Moreover, if the strategy fails to achieve the desired goal of increasing oil prices, these countries could suffer great losses.

“But for Moscow and Riyadh, this strategy has paid off,” commented the Wall Street Journal.

In the first quarter of this year, Saudi Arabia increased its daily oil revenues by $30 million, an increase of 5.7%. In total, for the three months, the increase amounted to $2.6 billion. Russia earned $2.8 billion in the same period. Experts predict that within the framework of OPEC +, both countries have the price situation under control and we can expect even more.

In October 2022, OPEC+ members announced plans to reduce production by 2 million barrels per year. Later, only OPEC itself reduced supply by 1 million barrels. Russia and Saudi Arabia eventually announced that they would extend the restrictions until the end of the year.

As a result, Brent crude oil prices rose 25% to $95. Experts do not rule out the possibility that prices could exceed $100. Russia's Urals crude has been selling for $75 a barrel in recent days.

Saudi Arabia now has the resources to finance major national projects, and expand its influence abroad.

Last week, the Kremlin restricted exports of gasoline and diesel, adding to energy shortages and sending prices soaring.

Russia, the world's second-largest oil exporter after Saudi Arabia, has pledged to cut output by 500,000 barrels per day to 9.5 million barrels per day from March until the end of the year, in an effort to lift oil prices.