The group of major oil-producing countries known as OPEC Plus said on Sunday that it would embark on a complex effort to adjust production in an effort to halt the recent slide in oil prices, including an additional cut in output of one million barrels a day by Saudi Arabia.
The Saudi cut would be for one month beginning in July, but could be extended.
The group, which also includes Russia and its allies, was under pressure to produce a deal to reverse the pessimism that has dominated the oil market in recent weeks. Despite two substantial output cuts since October, the price of oil has drifted about 15 percent lower over the past seven months.
The resulting deal reworks the output quotas of several countries, with some gaining and some losing production levels. “This is definitely not a clean and simple deal,” said Richard Bronze, head of geopolitics at Energy Aspects, a research firm.
OPEC Plus, in a statement, said that it was acting “ to achieve and sustain a stable oil market,” and that it was continuing its recent approach of being “proactive, and pre-emptive.”
As far as the markets are concerned, the key feature of the agreement is the additional production cut by Saudi Arabia.The Saudi oil minister, Prince Abdulaziz bin Salman, called the move “the Saudi lollipop” as he announced it during a news conference after the meeting.
The oil officials met over the weekend in Vienna to decide what to do about markets that have weakened in recent weeks. Prince Abdulaziz had been particularly vocal about warning that the group might cut production to shore up prices and trip up traders betting on lower prices.
Other producers, including Russia, have been less enthusiastic about scaling back production.
Sunday’s meeting occurred only two months after OPEC Plus announced an earlier round of cuts. Those trims only began in May and have had little time to make an impact. Analysts also say that the oil markets — where prices have slipped about 12 percent since mid-April — have been heavily influenced by broader economic factors, including China’s weaker-than-expected economic growth since the end of its “zero Covid” policies. That could lessen the impact of supply cuts.
On Thursday and Friday, after Washington reached a deal on the debt ceiling, prices for Brent crude, the international benchmark, rose about $3 a barrel to about $76 a barrel, but prices remain slightly below their levels on the eve of the April cut.
Saudi Arabia’s announcement comes a couple of days before the U.S. Secretary of State Antony Blinken is scheduled to visit the country for talks with Saudi leaders.
Saudi Arabia is the de facto leader of OPEC Plus, and under Prince Abdulaziz and his younger half brother, Crown Prince Mohammed bin Salman, the country has become more aggressive in its oil policies than in the past, preferring to make cuts in effort to keep a floor under prices rather than letting markets take their course.
Crown Prince Mohammed, the kingdom’s main policymaker, wants high oil revenues to finance his ambitious development plans.
Although OPEC does not publish price targets and its officials say they take a long-term view, analysts say the Saudis are now uncomfortable with prices below $80 a barrel for Brent crude. With OPEC Plus producing more than 40 percent of global oil supplies, the group can exert considerable sway over markets if it tries hard enough.
In the past, Saudi-led OPEC trims have set off friction with the Biden administration, which wants to keep oil prices down to ease pressure on American drivers and to avoid putting a brake on the already weak global economy.