OPEC+ nations, spearheaded by Saudi Arabia and Russia, concurred on Sunday to prolong voluntary cuts in oil production by 2.2 million barrels per day (bpd) through the second quarter.
This move aims to provide additional backing to the market amidst apprehensions about global growth and increased output from non-member countries.
Saudi Arabia, a member of the Organization of the Petroleum Exporting Countries (OPEC), has announced its intention to prolong its voluntary reduction of 1 million barrels per day (bpd) until the conclusion of June. This decision will maintain its output at approximately 9 million bpd.
Russia, leading OPEC allies in the coalition known as OPEC+, will reduce oil production and exports by an additional 471,000 barrels per day (bpd) during the second quarter. Alexander Novak, Russian Deputy Prime Minister, disclosed updated figures, highlighting an increasing reliance on production cuts to meet the specified target.
Amidst geopolitical tensions and Houthi attacks on Red Sea shipping, oil prices have gained support in 2024, though concerns about economic growth persist.
Brent crude concluded Friday’s trading at $83.55 per barrel, marking a 2% increase and contributing to a cumulative 8% rise in prices for the year.
Notably, Iraq, UAE, Kuwait, Algeria, and Oman have all committed to maintaining or extending their respective output cuts for the second quarter, contributing to OPEC+’s collective efforts.
Since late 2022, OPEC+ has implemented a series of output cuts to mitigate rising production from non-member countries, particularly the United States, and address concerns about demand amid economic challenges. The total pledged cuts by OPEC+ since 2022 amount to approximately 5.86 million bpd, equivalent to around 5.7% of daily global demand, reflecting ongoing efforts to stabilize the market.
Despite uncertainties in the oil demand outlook for the year, with varying expectations from OPEC and the International Energy Agency, the decision to extend cuts into the second quarter reinforces OPEC+’s commitment to a measured and gradual approach in responding to market dynamics, according to Gulf Business.
