OPEC+ came to an agreement earlier this month to institute record-breaking production cuts of nearly 10 million barrels per day. The production cuts were set to take effect on May 1st, but some members have taken it upon themselves to start earlier. Kuwait and Saudi Arabia have both made the decision to start scaling back production to work towards the production cut goal. Saudi Arabia has scaled back production from 12 million barrels per day(bpd) over the weekend to reach its goal of 8.5 million bpd. Kuwait is OPEC’s fourth largest producer and they have also made the decision to start the cuts early. Kuwait’s Oil Minister Khaled Al-Fadhel said that starting the cuts early was because they felt a responsibility to address the market conditions.
Saudi Aramco had its long-awaited initial public offering (IPO) last week debuting on the Tadawul, Saudi Stock Exchange at a valuation of $1.88 trillion. Aramco’s public debut made it the world’s largest IPO ever, toppling the previous record holder Alibaba in 2014 when they raised $25 billion. When the market closed today in the capital city of Riyadh, Aramco had a market value of over $2 trillion.
Recent drone attacks have wreaked havoc on the Saudi Aramco oil facilities along with imposed sanctions on Venezuela and Iran. These events should all be pointing one direction for the crude prices…..up. Instead of the anticipated price increase, the recent fear of recession has helped keep the market in check.