The average price of ICE Brent crude oil in the second quarter of 2023 (April 1 - June 30, 2023) remained stable at $77.75 per barrel, indicating tighter supply in the market compared to the previous quarter. Following the OPEC and its allies (OPEC+) meeting on April 3, 2023, a consensus was reached to reduce crude oil production by 2 million barrels per day until the end of 2023. Additionally, several countries, including Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Iraq, Algeria, Kazakhstan, and Gabon, volunteered to implement additional production cuts totalling 1.16 million barrels per day from May to December 2023. Furthermore, Russia extended its planned production cut by 500,000 barrels per day from March to June 2023 until December 2023. As a result, the total production reduction from May to December 2023 stands at 3.66 million barrels per day.
However, concerns about a global economic slowdown arose as major central banks, following the lead of the US Federal Reserve (Fed), raised their policy rates. This instability in the financial sector led to a crisis among medium-sized banks in the US, such as PacWest, Bancorp, and First Republic Bank (FRB), which is the 14th largest bank in the country. Additionally, negotiations between the Democrat Party and the Republican Party to raise the US debt ceiling (currently at $31.4 trillion) prolonged, raising the possibility of a government default on debt payments. Nonetheless, on June 3, 2023, US President Joe Biden signed legislation to raise the debt ceiling, enabling the US to resume issuing bonds until January 1, 2025. This move aimed to ensure the US can meet its debt obligations and avoid critical economic problems for both the US and global economy.
