Sep 20, 2023 - Economy

Saudi Arabia tightens its oil taps, sending prices toward $100 per barrel

Saudi Arabian oil production
Data: FactSet; Chart: Axios Visuals

Production cuts coordinated by oil giants Saudi Arabia and Russia have helped drive global crude prices sharply higher.

Why it matters: The rise in oil prices seems to be giving the stock market agita, by reinvigorating inflation pressures and increasing the chances that the Federal Reserve imposes more interest rate hikes.

  • The S&P 500 shed nearly 2% in August and is down 1.5% so far in September.

Catch up quick: Saudi Arabian oil production plunged in August, as the oil giant followed through on previously announced plans to cut supply.

  • Saudi officials have said production will languish at that level at least through December.
  • Production is down roughly two million barrels per day since September 2022.

The latest: West Texas Intermediate crude oil prices climbed above $92 a barrel in trading Tuesday, the highest in 10 months for the U.S. benchmark.

  • Brent crude, the global benchmark, clawed above $95 a barrel.

What they're saying: Saudi officials have argued that the extension of production cuts, which angered many Western officials, is a prudent response to surprisingly soft global demand, especially from China.

  • "We want to make sure that the messaging is clear," said Prince Abdulaziz bin Salman, Saudi Arabia's energy minister, at an oil industry event in Calgary this week. "It's not about jacking up prices."

The bottom line: Intent aside, the Saudi cuts seem to be influencing views about the near-term direction of oil prices.

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