Saudi Arabia and a handful of other countries stunned the world on Sunday by announcing significant cuts in their oil production – totaling more than a million barrels of oil per day – starting in May. Here's what to know about these cuts:
A person goes to the pump at a gas station in Arlington, Va., on July 29, 2022. Gas prices have come down significantly since peaking last year but they could rise again after Saudi Arabia and other countries said they would collectively cut oil production by more than one million barrels.
"It was a massive surprise to everybody in the market," says Jorge Leon, a senior vice president at Rystad Energy.Oil markets have responded with a price jump ... For the record, Saudi Arabia said the cuts were a"precautionary measure aimed at supporting the stability of the oil market." The kingdom consistently denies that production decisions are made with a specific price target in mind.
President Biden made a high-profile trip to Saudi Arabia last year to ask for an increase in oil production, seeking to bring down high gasoline prices. He was rebuffed.Meanwhile, Saudi Arabia is growing closer to China, economically as well as diplomatically.
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