1 Apr 2024 15:16

OPEC+ extends voluntary oil production cuts amid global market stability concerns

MOSCOW. April 1 (Interfax) - Several OPEC+ countries including Kazakhstan have confirmed the extension of additional voluntary oil production cuts, as announced in early March.

These restrictions, initially enforced on January 1 for the first quarter, will now remain effective until the end of June.

For the first quarter, numerous OPEC+ members declared their commitment to further voluntarily curtail production by 1.7 million bpd, with Russia pledging to reduce oil and petroleum product exports by 0.5 million bpd.

The decision to prolong restrictions into the second quarter was justified by alliance participants to uphold stability and balance in the global oil market. The lost production volumes will be gradually reinstated depending on market conditions.

Saudi Arabia has extended its voluntary oil production cut of 1 million bpd, initiated in July 2023. Consequently, Saudi Arabia's oil production will remain at 9 million bpd for precisely one year, marking the Kingdom's lowest production level since 2011, excluding the pandemic year of 2020.

Russia, as part of additional restrictions, announced its intention to not only decrease export supplies but also actively reduce production. In the second quarter, the country aims to limit both its production and exports by a total of 471,000 bpd for each month.

The UAE, Kuwait, Kazakhstan, Algeria, and Oman, among other OPEC+ members, also announced the continuation of their additional voluntary restrictions: the UAE by 163,000 bpd, Kuwait by 135,000 bpd, Kazakhstan by 82,000 b/d, Algeria by 51,000 b/d, and Oman by 42,000 bpd. However, Iraq's statement was notably absent, despite its commitment to reduce oil production by 223,000 bpd in the first quarter.

Following the OPEC+ decision, the U.S. Department of Energy revised its forecast for Brent oil prices upward for both 2024 and 2025 by $5 per barrel. The forecast for 2024 has been adjusted from $82.42/barrel to $87/barrel, while for 2025, it has been increased from $79.5/barrel to $84.8/barrel.

Additionally, the International Energy Agency (IEA) anticipates OPEC+ countries will maintain their voluntary production curbs through 2024 unless stated otherwise, which is expected to shift the market from a surplus to a slight deficit. The IEA highlighted that despite this, significant volumes of oil in tankers are yet to reach their final destinations, potentially offering some relief to the market.