Saudi Arabia has announced plans to cut its oil production by 1 million barrels per day (bpd) as the Kingdom pledged to do “whatever is necessary” to prop up sagging prices.
Oil prices were expected to jump on Monday after the surprise unilateral decision by the Gulf state.
Saudi oil minister Prince Abdulaziz bin Salman said the country would voluntarily slash oil production in an attempt to boost prices, after the Opec cartel and its allies failed to agree a collective deal on cuts.
The move, which takes effect from July, amounts to a reduction of around 1pc of global supplies.
A further production fall is likely to inflame tensions with Joe Biden, who has encouraged producers to turn on the taps to keep prices low.
The US President, who has been hurt politically by higher fuel prices, has accused Opec members of siding with Vladimir Putin by agreeing to cut output. US Secretary of State Anthony Blinken is scheduled to travel to Saudi Arabia this week.
The move also risks reigniting cooling inflation across Britain and Europe. Price rises across the economy have been closely linked to energy costs.
At a press conference in Vienna last night after the Opec+ meeting, Prince Abdulaziz suggested the reductions were a gift to the world as he called the country’s produc- tion cut a “Saudi lollipop”. The oil minister also drew a link to earlier cuts announced by OPEC in April when he said the Kingdom “wanted to ice the cake.”
The unilateral cut came at the end of a tense meeting marred by disagreements among the group of oil producing nations.
The Saudis had hoped to agree to cut the collective output of Opec and its allies by 1 million barrels a day, sharing the reduction between members. However, no deal could be agreed amid squabbling over quotas.
Members were forced to deny there were tensions within the grouping. Russian Deputy Prime Minister Alexander Novak said there was no split with Saudi Arabia, while UAE Energy Minister Suhail Al Mazrouel told reporters: “We will always support Opec and will always stay together.”
Giovanni Staunovo, a commodity analyst at UBS, said: “Despite a very long meeting, the group shows it remains united, aiming to keep the oil market in balance.”
He said oil prices were likely to rise in early trading on Monday morning. Opec+ accounts for just over 40pc of global production and Opec controls around 80pc of reserves.
Saudi Arabia’s decision to go it alone on cuts comes after Prince Abdulaziz last week told traders who had bet against oil prices to “watch out”.
Oil prices have fallen over the last year despite repeated cuts to output. Brent crude peaked at $125 a barrel a year ago but traded at just over $76 on Friday - below the level when Russia invaded Ukraine last February and below the crucial $80 price at which the Saudi government can fund its spending.
Opec+ announced a surprise oil production cut of 1 million bpd in April, which sent the prices leaping. However, it had sagged since then amid concerns about the outlook for the global economy.
While Opec and its allies did not agree to further cuts on Sunday, members did commit to extending April’s voluntary cuts until the end of next year.
The wider Opec+ group, which includes the 13 Opec members and 10 additional producers, promised to cut production in 2024. However, the grouping will meet again in November and plans may change.
It came as the GMB union accused Labour of creating a “cliff edge” with plans to ban new oil and gas production in the North Sea. General secretary Gary Smith said workers were “very worried” about proposals to ban new licences in the North Sea, which the union argued would make Britain more dependent on imports.
Mr Smith told Sky News: “Their policies are going to create a cliff edge with oil and gas extraction from the North Sea.
”There is a lot of oil and gas in the North Sea and the alternatives facing the country are that we either produce our own oil and gas - take responsibility for our carbon emissions - or we are going to import more oil and gas.”