Saudi Arabia will make an additional voluntary cut of 1 million barrels of oil a day as the OPEC+ alliance of major oil-producing countries faces flagging oil prices and a looming supply glut.

Unveiling the unilateral cut, Saudi Energy Minister Prince Abdulaziz bin Salman said, “This is a grand day for us, because the quality of the agreement is unprecedented," adding that the new production targets are “much more transparent and much more fair."

The Saudi energy minister further said the cut could be extended and that the group “will do whatever is necessary to bring stability to this market."

Saudi Arabia’s energy ministry said Riyadh will implement an additional voluntary one-month 1 million-barrel-per-day cut starting this July, which can be extended. This will bring the kingdom’s total voluntary declines to 1.5 million barrels per day over the period, reining in its production to 9 million barrels.

The Saudi energy minister described the kingdom’s additional 1 million barrel-per-day voluntary reduction as a “Saudi lollipop” and stressed it will be implemented.

“We have always honoured our commitments,” he said during the Sunday press briefing. 

The Saudis felt the cut was necessary underlines the uncertain outlook for demand for fuel in the months ahead. There are concerns about economic weakness in the US and Europe, while China’s rebound from COVID-19 restrictions has been less robust than many had hoped.

Prior to the Saudi production cut announcement, OPEC--which groups the Organization of the Petroleum Exporting Countries and allies led by Russia--reached a deal on output policy after seven hours of talks and decided to reduce overall production targets from 2024 by a further total of 1.4 million barrels per day.

Many of these reductions will not be real as the group lowered the targets for Russia, Nigeria, and Angola to align them with their current production levels. The group even allowed, the United Arab Emirates to raise output.

International benchmark Brent crude climbed as high as $87 per barrel but has given up its post-cut gains and loitered below $75 per barrel recently. US crude has dipped below $70.

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