OPEC+ countries extend production cuts into second quarter

Several members of the oil-producer group announced on Sunday, the extension of voluntary supply cuts of 2.2 million b/d into the second quarter of this year.

PHOTO: An oil pump against the OPEC logo. Getty Images

The Organization of the Petroleum Exporting Countries and its allies (OPEC+), at its latest meeting, decided to extend these voluntary supply cuts into the second quarter of 2024, as the group “aimed at supporting the stability and balance of oil markets,” it said.

OPEC’s de-facto leader Saudi Arabia announced a voluntary cut of 1 million b/d, followed by Iraq (220,000 b/d), the UAE (163,000 b/d), Kuwait (135,000 b/d), Kazakhstan (82,000 b/d), Algeria (51,000 b/d) and Oman (42,000 b/d) through the end of June.

Russia, which leads OPEC+, will continue oil output and export cuts by an additional 471,000 b/d in the second quarter, its Deputy Prime Minister Alexander Novak stated on Sunday.

Russia pledged to reduce its oil output by 350,000 b/d in April, with an export cut of 121,000 b/d. In May, the country will cut output by 400,000 b/d and exports by 71,000 b/d, Novak said. In June, Russia plans to cut 471,000 b/d from its oil production.

This voluntary production cut is in addition to the output reduction announced by the country in April last year. Russia agreed to voluntarily reduce output by 500,000 b/d in April 2023, which extends until the end of 2024, bringing the country’s total output to around 9.5 million b/d.

This announcement will support Brent’s price gains as “signs of tightness in the physical market continue to push crude oil higher,” ANZ Bank’s senior commodity strategist Daniel Hynes said. “Output cuts by the OPEC+ alliance continue to reduce supply as the market worries about the renewed tensions in the Middle East,” he added.

The Saudi-led coalition agreed to slash production of 2.2 million b/d for the first quarter of this year in November 2023. Total production cuts made by OPEC+ since 2022 stand at around 5.86 million b/d, Reuters reported.

OPEC expects robust global oil demand growth of 2.2 million b/d this year.

By Aparupa Mazumder 

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