OPEC+ countries — led by Saudi Arabia and Russia — have taken further action to reduce oil supply in a bid to shore up prices and support stability in a market weighed down by the global economic slowdown. On Monday, Saudi Arabia — the world’s biggest exporter of crude oil — announced an extension of its cut of 1 million barrels per day in its oil production until at least the end of August. The cut, which came into effect on Saturday, was initially planned for the month of July. Analysts said the latest OPEC+ cuts were the clearest sign yet that oil producers were attempting to stem market volatility amid an uncertain economic outlook

Russia’s Deputy Prime Minister Alexander Novak also said that his country would voluntarily cut supplies by 500,000 barrels per day in August by reducing exports. This would deepen a cut of the same size that Moscow implemented in March. The announcements sent prices for Brent crude, the global oil benchmark, up 0.7%, while US benchmark WTI rose 0.8%.

Oil prices have declined significantly since March last year, when they hit a 14-year high in the wake of Russia’s full-scale invasion of Ukraine. The cuts by OPEC+ have been undertaken in an attempt to balance Saudi Arabia’s budget, which has slipped back into a deficit this year after reporting a surplus in 2022 for the first time in almost a decade. The kingdom needs Brent crude to trade at around $81 a barrel in order to balance its budget, according to the International Monetary Fund.

Other OPEC+ members have pledged to slash output through the end of 2024 amid a disappointing outlook for global demand and a strong post-pandemic rebound in the Chinese economy looking increasingly unlikely. Chinese factory survey data released Monday showed only modest growth in activity last month, with some firms cutting staff as sales came in weaker than expected.

Analysts said the latest OPEC+ cuts were an indication that oil producers were attempting to control market volatility in an uncertain economic environment. The decisions by Saudi Arabia and Russia to reduce oil supply come at a crucial time for the global economy, as the outlook remains uncertain and the need for stability grows. Their actions demonstrate the willingness of OPEC+ countries to take decisive action in order to support the stability and balance of oil markets.