OPEC+ announces significant oil production cuts
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The announcement was made on Thursday following a relentless push from Saudi to make additional production cuts since July on the back of crude prices falling by more than 10 per cent from their September high.
The OPEC+ cartel has agreed to cut oil production by a further 1 million barrels per day (BPD) for early next year, with Saudi Arabia also announcing voluntary cuts of a similar amount, in a move that would likely drive up the oil prices across the world.
The announcement was made on Thursday (Nov 30) following a relentless push from Saudi to make additional production cuts since July. The kingdom wanted its OPEC+ allies to reduce oil production on the back of crude prices falling by more than 10 per cent from their September high.
The move follows a meeting in June where OPEC+ agreed on a complex deal that revised production targets for several members.
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Individual members revise targets
Final details of the accord, including national production levels, will be announced individually by each country rather than in the customary OPEC+ communique, Bloomberg reported citing delegates of the group.
Russia, on the other hand, has voluntarily agreed to a supply cut of 500,000 bpd through the end of the first quarter, according to a statement by Deputy Prime Minister Alexander Novak.
A source in the Saudi Energy Ministry told the Saudi Press Agency that the kingdom will extend its voluntary production cut through the end of the first quarter of 2024.
While Algeria agreed to cut January oil production by another 50,000 bpd.
The are 14 countries that are members of the OPEC+ cartel, with Brazil declaring it to be the 15th member on Thursday.
These 14 countries represent around 40 per cent of world oil production.
Oil cuts to drive up prices
The announcement comes at a time when the prices of oil were down to a near $98 a barrel in September due to the sluggish global economy and growing supplies outside the cartel’s quota system.
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It has been further predicted that the price could fall even further next year, when forecasters including the International Energy Agency anticipate a sharp slowdown in demand growth.
Meanwhile, the move boosted Brent crude above $84 a barrel, up about 1.3 per cent on the day and up 6 per cent since Friday to its highest level in three weeks.
(With inputs from agencies)
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