By Adedapo Adesanya
Kuwait joined Saudi Arabia on Monday in announcing fresh, voluntary oil production cuts to be implemented in June.
The member of the Organisation of the Petroleum Exporting Countries (OPEC) made the decision to slash production by 80,000 barrels per day in June, on top of the cuts already agreed under a pact by the group of major oil producing countries last Month.
The Kuwaiti Oil Minister, Mr Khaled al-Fadhel, disclosed this on Monday, joining the de-facto leader of the cartel in announcing fresh oil production cut to be implemented next month.
Saudi Arabia earlier said on Monday it will reduce its crude oil production for June by an additional one million barrels per day.
The Ministry of Energy official said Saudi Aramco had been directed to reduce production.
“This brings the total production cut that will be carried out by the Kingdom, to around 4.8 million barrels per day, from the April production level,” the official said
“Therefore, the Kingdom’s production for June, after both its targeted and voluntary cuts, will be 7.492 million barrels per day,” the official added.
The ministry also directed Aramco to reduce production in May, from the target level of 8.5 million barrels per day.
The official said the Kingdom “aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets.”
Saudi Arabia also said on Monday it would raise value added tax (VAT) to 15 percent from the current 5 percent with effect from July 1.
More Arab economies may need to follow Saudi Arabia in hiking taxes to replenish reserves that have been savaged by the spread of the coronavirus and the collapse of oil prices, say analysts.
According to market analysts, the double problem of the pandemic and the collapse in oil prices could force Gulf states to raise fresh funds through taxation, bond sales and asset disposals.
However, neighboring UAE was quick to rule out a similar move. In a statement, the UAE finance ministry said it denied there were any plans currently to raise VAT.
Following the announcement of the cut, oil prices rose with Brent Crude hitting $31 per barrel and WTI Crude up to $25 per barrel.
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