Own Woodside shares? Here's how OPEC's massive cuts are impacting the oil price

Woodside Energy Group Ltd (ASX: WDS) shares are bucking the broader selling trend today and have edged back into the green.

Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed yesterday trading for $38.18. At the time of writing, shares are swapping hands for $38.21 apiece, up 0.1%.

The ASX 200 is down 0.6% at this same time.

Woodside shares are likely getting some helpful tailwinds today from another overnight lift in the oil price.

And investors have the Organization of the Petroleum Exporting Countries (OPEC) to thank for that.

How is OPEC boosting the oil price and Woodside shares?

The Brent crude oil price ticked up 1.1% overnight to US$85.87 per barrel. That's up 15% from the US$74.65 per barrel Brent was trading for on 2 July.

As you'd expect, the soaring oil price helped drive Woodside shares to a 10% gain over that same period.

It's not soaring demand that's been driving the oil price higher. Rather it's largely due to production cuts from OPEC+, which includes nations like Russia.

According to a Bloomberg survey, OPEC crude output plummeted by 900,000 barrels per day in July. The cartel's combined output averaged 27.8 million barrels per day over the month.

Russian crude shipments were reported to have reached seven-month lows of around three million barrels a day in July. But it's Saudi Arabia that's leading the charge, with the kingdom's production falling to approximately 9.2 million barrels a day.

This represents the biggest monthly OPEC production cut in three years. The last time the member states cut supplies on this kind of scale was back in 2020 when the pandemic locked down much of the world and knocked the stuffing out of energy demand.

If you owned Woodside shares back then, you'll likely remember the painful 51% fall in the stock between 14 February and 20 March 2020 as the oil price cratered.

What now?

Looking ahead, analysts broadly expect Saudi Arabia to extend its one-million barrel per day cuts into September.

In what would be good news for Woodside shares, PVM Oil Associates analyst Tamas Varga said (quoted by Bloomberg):

The kingdom will want to see a protracted rise toward US$90 a barrel and possibly improvement in Chinese economic data to start considering putting the one million barrels per day back into the market.

Woodside share price snapshot

Woodside shares are up 17% in 12 months and up 8% so far in 2023.