The Organization of the Petroleum Exporting Countries (OPEC) and its allies decided on Sunday to extend the agreement on production cuts until the end of next year to stabilize prices.
In 2022, OPEC+ decided to reduce production by two million barrels per day, and since May, some of its members have voluntarily reduced it by an additional 1.66 million barrels per day. The new production regime was supposed to remain in effect until the end of the year.
At the regular meeting on Sunday, they decided after several hours of negotiations to extend it until the end of 2024 and to reduce production by another 1.4 million barrels per day starting in January, to 40.46 million barrels per day.
The new quotas will not actually mean lower production for all members. Thus, Russia, Nigeria, and Angola are already producing less, and the group has only adjusted their quotas to the actual level of production.
Saudi Arabia will reduce its production from July from 10 million to 9 million barrels per day.
– We wanted to add the icing on the cake. We always want to introduce a dose of tension; we do not want people to guess what we will do… The market needs stabilization – said Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud at a press conference.
Saudi Arabia is the only country in OPEC+ with enough reserve and storage capacity to reduce or increase production without major difficulties.
– The Saudis threatened speculators that they would make it difficult for them, and they did. They clearly want higher prices – explains Gary Ross from Black Gold Investors.
The United Arab Emirates will be able to increase production by about 200,000 barrels per day under the new agreement, to 3.22 million barrels per day.
