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Riyadh to cut oil production, drive prices up

Saudi Aramco's chairman and energy minister Khalid al-Falih is looking to raise oil prices [Getty]

Date of publication: 15 February, 2018

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The increasingly cash-strapped kingdom which relies on oil revenues for more than 90 per cent of government spending wants to drive crude prices up.

Riyadh said on Wednesday that it will again curb oil production and exports, as part of the kingdom's efforts to drive oil prices up.

Saudi Aramco's output will be 100,000 barrels per day below its February level, according to the kingdom's energy ministry.

"Saudi Arabia remains focused on working down excess oil inventories," a ministry spokesman said, according to AFP.

Saudi Arabia is the world's top oil exporter and Riyadh last month called for further cooperation between OPEC and non-OPEC producers, after an earlier deal to throttle production succeeded in boosting prices.

Oil prices fell from a high of $110 per barrel in 2014 to $30 in 2016. Oil prices have recovered somewhat, with the price now nearing $60 per barrel.

On Tuesday, the International Energy Agency warned that surging oil production in the United States could halt any further increase in crude prices. 

Shale producers in the US are ramping up output to cash in on rebounding prices.

In 2018, the US is set to outstrip both Saudi Arabia and Russia's output levels, according to the International Energy Agency.

Riyadh is currently engaged in expensive foreign wars, including Yemen, and is pursuing an ambitious domestic reform programme.

Oil sales account for more than 90 per cent of budget revenues in the desert kingdom.

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