– Saudi Arabia’s decision to unilaterally cut 1 million b/d of production in July 2023 has so far been backfiring as oil prices dropped back to levels seen before the OPEC+ summit, brushing aside the Middle Eastern kingdom’s pledge.
– The Saudi government remains optimistic and is still expecting an annual fiscal surplus of 4.3 billion this year, although the IMF’s breakeven level of $81 per barrel looms large.
– According to Bloomberg, if one is to account for Saudi Arabia’s giga projects (such as the new city of Neom) which the IMF treats separately, the country’s breakeven level would rise to $95 per barrel.
– The International Monetary Fund came out this week saying that OPEC+ production cuts would lower Saudi Arabia’s GDP growth in 2023 to 2.1%, after last year’s unprecedented 8.7%.
2. Canadian Wildfires Become a Large-Scale Risk Again
A return to above-normal temperatures and prolonged dry weather has led to a resurgence in wildfires across Western Canada, impacting oil and gas production in the province of Alberta.
– Following a steady rebound in Canadian gas production by the end of May, gas output has dropped below the 18 BCf per day mark again as the number of out-of-control fires rose to 17 lately.
– The three most impacted Alberta producers – Cenovus Energy, Crescent Point, and Paramount Resources – have restarted.