Following Saudi Arabia’s announcement that it would voluntarily reduce its production output by one million barrels per day (bpd) starting in July, global crude oil prices have begun to rise. If the kingdom follows through, it will reduce Saudi Arabia’s oil output to the lowest level in several years.

Following the news, the primary global benchmarks rose over 2% Monday morning. By 9:50 AM London time, Brent crude futures sat at $77.89 per barrel, an increase of 2.3%. US benchmark West Texas Intermediate futures rose to $73.50, a rise of 2.4%.

Prior to Saudi Arabia’s announcement on Sunday, the OPEC+ group of OPEC and allied oil producing nations decided not to make any changes to previously agreed-upon production cuts for the rest of the year.

Saudi Arabia however, will see its production output decline from roughly 10 million barrels per day in May, to 9 million barrels per day, according to a statement by the kingdom’s energy minister, Prince Abdulaziz bin Salman, which added that Saudi Arabia “will do whatever is necessary to bring stability to this market.”

At its meeting, OPEC+ agreed to reduce overall crude oil production to 40.46 million barrels per day in 2024. According to the agreement, Russia’s quota will be reduced in 2024 from the 10.478 million barrels per day of 2023 to 9.828 million barrels per day.

The OPEC+ alliance’s policy decisions have a tremendous impact on the price of crude globally due to the fact the alliance supplies almost 40% of the total global crude output.

Since the OPEC+ alliance took its first steps to cut production outputs in October of 2022, crude prices have steadily declined over 20%. In November the alliance agreed to reduce output by two million barrels per day.

In April, the group agreed to further cuts of roughly 1. million barrels per day which went into effect in May and will last through the end of 2023.