OPEC+ Agrees To Extend Voluntary Oil Production Cuts Through November 2024

The OPEC+ nations have decided to prolong their additional voluntary production cuts of 2.2 million barrels per day until the end of November 2024. This decision was made during a virtual meeting on 5th September 2024, involving countries like the UAE, Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman.

In August 2024, Saudi Arabia, Russia, the UAE, Kuwait, Algeria, and Oman held two ministerial discussions with Iraq and Kazakhstan. These discussions aimed to ensure full conformity and compensation for overproduced volumes since January 2024. Both Iraq and Kazakhstan pledged to engage with secondary sources to outline their plans for production adjustments.

During the virtual meeting on 5th September 2024, the eight member countries emphasised their collective resolve to ensure full compliance with the voluntary production adjustments. They agreed to extend their additional voluntary production cuts of 2.2 million barrels per day for two months until the end of November 2024.

Iraq and Kazakhstan have been overproducing since January 2024 but reaffirmed their commitment to the agreement during visits by the OPEC Secretary General in late August. These visits were coordinated with Saudi Arabia's Minister of Energy and included workshops organised by the OPEC Secretariat.

The workshops provided extensive details on immediate measures being implemented by Iraq and Kazakhstan to achieve full conformity with required production levels. These measures included advancing field maintenance plans and reducing production alongside delaying and canceling spot sales for August.

Future Plans

The participating countries have agreed that after November 2024, these cuts will be gradually phased out starting from December 1st, 2024. There will be flexibility to pause or reverse these adjustments as necessary. The overproducing countries also reconfirmed their commitment that the entire overproduced volume will be fully compensated for by September 2025.

Iraq and Kazakhstan committed to adjust compensation plans for any overproduced volumes in August. They submitted their compensation schedules to the OPEC Secretariat on 22nd August as agreed under the 53rd meeting of the JMMC on April 3rd, 2024.

This collective effort underscores a renewed firm commitment among OPEC+ members to stabilise oil markets through coordinated production adjustments and compliance measures.

With inputs from WAM