OPEC+ Extends Voluntary Crude Supply Cuts to End of June, Aiming to Stabilize Oil Markets

📝 SUMMARY: In a significant development for global oil markets, heavyweight oil producers Saudi Arabia and Russia, along with several other pivotal OPEC+ members, have decided to prolong their voluntary crude supply reductions through the second quarter. This decision underscores the group's commitment to exerting a controlling influence over the oil supply to bolster prices, which have been wavering within a narrow range despite previous cuts.

Saudi Arabia, the de facto leader of OPEC, has declared it will maintain its substantial voluntary cut of 1 million barrels per day until the end of June, setting its crude production around 9 million barrels per day. Similarly, Russia announced a reduction in its production and export supplies by 471,000 barrels per day for the same period, slightly adjusting its previous commitment. Other key producers, including Iraq and the UAE, have also committed to extending their voluntary cuts, contributing to a collective effort to tighten market supplies.

This initiative builds on the formal policy adopted in November, where OPEC+ agreed to a collective output reduction of 2 million barrels per day until the end of 2024. The additional voluntary cuts introduced by some members aim to further curb supply in a bid to uplift oil prices, which have experienced limited growth due to a variety of factors, including geopolitical tensions and seasonal demand fluctuations.

The voluntary nature of these cuts allows OPEC+ members to bypass the need for unanimous consent required for formal policy changes, facilitating quicker and more flexible responses to market conditions. As the next round of policy negotiations approaches in June, the coalition will review the impact of these adjustments on the market, with the potential for further action depending on the evolving economic and geopolitical landscape.

This strategic maneuver by OPEC+ reflects an ongoing effort to manage global oil supplies effectively, amidst challenges including fluctuating demand, geopolitical risks, and the global transition towards greener energy sources.

🔍 SOURCE: https://www.cnbc.com/2024/03/03/saudi-arabia-to-extend-1-million-barrel-per-day-crude-oil-output-cut-until-the-end-of-june.html