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Russia announced that it would increase its voluntary oil production cuts to 500,000 barrels per day and extend the decision until the end of the first quarter of 2024. Saudi Arabia also announced that it would extend its voluntary oil production cuts by 1 million barrels per day until the end of the first quarter of 2024.
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| Ras Tanura oil refinery in Saudi Arabia. Photo: Reuters |
The decisions were made after a ministerial meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to discuss maintaining stability and balance in the oil market. Countries agreed to cut oil production by nearly 700,000 barrels per day (bpd), less than 1% of global supply, in an effort to boost prices. With the decision by Russia and Saudi Arabia, OPEC+ will cut voluntary production by about 2.2 million bpd early next year. Russian Deputy Prime Minister Alexander Novak said Russia's voluntary cuts will include crude and products.
Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan and Algeria are among the producers that have said the cuts will be gradually lifted after the first quarter of 2024 if market conditions allow.
The OPEC+ meeting comes amid expectations of a potential market glut and the end of Saudi Arabia’s 1 million barrels per day cut next month. Last month, the International Energy Agency (IEA) forecast slower demand growth in 2024 as the final stages of the post-pandemic economic recovery pass and as energy efficiency gains, electric vehicle fleet expansion, and other factors kick in.
The market reaction to the OPEC+ announcement was subdued, with Brent crude futures ending the trading session on November 30 at $82.85 a barrel, down slightly from the previous close of $83.10 a barrel.
According to analysts, this price level likely reflects the market view that OPEC+ actions may not be enough to tighten the global supply-demand balance in the first quarter and enough to spark a recovery.
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