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Saudi Arabia is cutting oil production even though gas prices in the US are at their highest in nine months.

Gasoline and other energy costs may go up even further as a result of Saudi Arabia, the leader of OPEC, deciding to extend its oil production cut for at least another month.

An official in Saudi Arabia’s Ministry of Energy confirmed Thursday to the state-run SPA news agency that the country will maintain its voluntary production cut of one million barrels per day throughout the month of September.

The action is intended to promote the stability and balance of oil markets, and the source told state media that the decrease might be extended further.

The original announcement of the cut came in June following a meeting of the alliance of the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other smaller producers. This is the second time the kingdom has prolonged the cut.

Almost simultaneously, in September, Russia declared that it will reduce oil exports by 300,000 barrels per day.

On Thursday, oil in the United States jumped $1.60 to $81.05 per barrel. Brent crude, the international standard, increased by 1.5%, reaching $84.50 a barrel.

The oil market has been trending higher in recent weeks, and analysts think that this is mostly down to the moves by Saudi Arabia and Russia.

Rick Joswick, head of near-term oil research and analysis at S&P Global Commodity, said, “This announcement backs up those price increases, but it probably won’t make prices go up much more on its own.”

Even while oil prices have rallied in recent weeks, helping to increase pump prices for US customers to nine-month highs, Saudi Arabia and Russia have remained restrained in their supply.

Robert Yawger, a vice president at Mizuho Securities in charge of energy markets, said, “It contradicts the United States’ efforts to curb inflation.” Yawger pointed out that the budgets of Russia and Saudi Arabia are dependent on the price of oil.

An official from the White House commented on the Saudi output report by saying that prices have dropped dramatically over the past year.

In a statement, the source said, “We will keep working with producers and consumers to make sure energy markets support economic growth and lower prices for American consumers.”

According to AAA, the national average price of a gallon of normal gas reached $3.82 on Thursday. That’s a 28-cent rise over the previous month, making it the highest it’s been since late October 2022.

Gas prices have risen due to a number of factors, including supply curbs by OPEC and excessive heat that has shut down refineries. It’s possible that gas costs will grow to the point that consumers can no longer afford them.

Yawger drew a firm line in the sand at $4. When prices hit $4, “demand destruction” occurs. It’s like shooting the golden goose.

Diesel, an essential fuel for locomotives, ships, and vehicles, is also rising sharply in price.

The International Monetary Fund estimates that Brent crude needs to trade at roughly $81 per barrel for Saudi Arabia to be able to balance its budget. This year is the first time in almost a decade that the kingdom has reported a budget deficit following a surplus in 2022.

Russia is attempting to increase income to fund its military operation in Ukraine. The International Energy Agency said this month that Russia’s oil export earnings dropped by $1.5 billion in June, to about half their June 2017 levels.

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