OPEC+ Countries Pledge Extended Voluntary Oil Cuts Through Second Quarter Of 2024

In a significant move to bolster the stability and balance of oil markets, the OPEC Secretariat has disclosed the decision of several OPEC+ nations to implement additional voluntary production cuts. These cuts, amounting to 2.2 million barrels per day, are set to commence from the 2024 required production level, as determined during the 35th OPEC Ministerial Meeting on June 4, 2023. This initiative builds upon the voluntary reductions announced in April 2023, which have now been extended through the end of 2024.

The countries participating in these supplementary voluntary cuts include Saudi Arabia, leading with a reduction of 1,000 thousand barrels per day. Following are Iraq with 220 thousand barrels per day, the United Arab Emirates with 163 thousand barrels per day, Kuwait with 135 thousand barrels per day, Kazakhstan with 82 thousand barrels per day, Algeria with 51 thousand barrels per day, and Oman with 42 thousand barrels per day. These adjustments are scheduled for the second quarter of 2024, with a plan to gradually reintroduce the volumes depending on market conditions.

Additionally, the Russian Federation has announced its own voluntary cutback of 471 thousand barrels per day for the same timeframe. This reduction will be applied to both crude oil production and exports in a phased manner: 350 thousand barrels per day from production and 121 thousand barrels per day from exports in April; 400 thousand barrels per day from production and 71 thousand barrels per day from exports in May; culminating in a total cut of 471 thousand barrels per day from production in June. This move by Russia supplements its previously declared voluntary reduction of 500 thousand barrels per day that extends until December 2024. The export cut is calculated based on the average export levels recorded in May and June of 2023.

This collective effort by OPEC+ countries to voluntarily reduce oil production underscores their commitment to maintaining market equilibrium. By adjusting supply in response to global demand dynamics, these nations aim to foster a more stable and balanced oil market environment. The gradual reinstatement of these cuts will be carefully managed to align with prevailing market conditions, ensuring a measured approach to global oil supply management.

With inputs from SPA