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Saudi Arabia said on Monday it was extending a voluntary oil production cut and Russia said it was slashing exports, as major producers tried to prop up slumping prices.

The cut by Riyadh of one million barrels per day was first announced after a June meeting of oil producers and took effect at the weekend.

Saudi Energy Minister Prince Abdulaziz bin Salman noted at the time that it was "extendable".

In a report on Monday announcing that the cut would continue through August, the official Saudi Press Agency said it "can be extended" further, citing an energy ministry source.

"The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets," SPA said.

Also on Monday, Russia unveiled its export cut of 500,000 bpd for August "as part of efforts to ensure that the oil market remains balanced".

The announcement by Alexander Novak, Russian deputy prime minister responsible for energy policy, came on the back of cuts to Russian oil production this year by the same volume as part of Moscow's response to Western sanctions levied over the conflict in Ukraine.

Recent efforts by OPEC+ to bolster prices by reducing output have not succeeded, and analysts expressed doubt this one would be any different despite initial increases recorded Monday.

"It's the usual knee-jerk reaction to reports of production cuts," said IG analyst Chris Beauchamp.

"But given it's not a coordinated move from all (OPEC+) members it seems hard to imagine there's much more upside in this."

Muted response

The initial market reaction was muted.

Brent was up 0.98 percent to $76.15 per barrel, and West Texas Intermediate was up 1.02 percent to $71.36 per barrel.

Since the beginning of the year, Brent is down 11 percent and WTI is down 7 percent, as a sluggish recovery in China and worries about the US economy weigh on demand forecasts.

"Saudi Arabia is hoping to bring down global inventories over the summer in order to lend support to prices," said Jamie Ingram, senior editor at MEES.

"There will be little expectation that Russia will fully comply with this latest commitment, but the key thing here is that it's a public statement of commitment to Saudi Arabia's market management strategy."

The average price of Russian Urals was $52.17 per barrel during the first half of 2023, down from $84.09 during the same period last year, the Russian finance ministry said Monday.

That drop reflects the effects of a price cap imposed in December by a coalition involving the Group of Seven leading economies, the European Union and Australia.

Saudi Arabia is counting on high oil prices to fund an ambitious reform agenda that could shift its economy away from fossil fuels.

Oil giant Saudi Aramco, the jewel of the kingdom's economy, said it recorded profits totalling $161.1 billion last year, allowing Riyadh to notch up its first annual budget surplus in nearly a decade.

Analysts say the kingdom needs oil to be priced at $80 per barrel to balance its budget, which is well above recent averages.