The world's major oil producers will pull 2.2 million barrels per day from the market next year.
On November 30, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) met online to discuss production in 2024. According to the announcement after the meeting, countries will reduce production by 2.2 million barrels per day. This figure includes the voluntary supply reduction of 1.3 million barrels per day by Russia and Saudi Arabia, which will be extended until the first quarter of next year.
OPEC+ currently supplies more than 40% of global oil production, with 43 million barrels a day. Yesterday's meeting took place amid the risk of oversupply in the global market.
After a series of cuts from late 2022, Saudi Arabia, Russia and other OPEC+ members have pledged to withdraw 5.16 million barrels of oil per day from the market this year, equivalent to 5% of global oil demand. This figure includes 3.66 million barrels from OPEC+ countries and voluntary reductions by Saudi Arabia and Russia.
OPEC+ is focused on production cuts as oil prices have fallen nearly 20% since late September. In addition, economic growth next year is forecast to weaken and global oil supplies may be surplus.
However, world crude oil prices fell after the OPEC+ meeting. Brent crude is currently down 0.3% at $82 a barrel. WTI crude is down 0.25% at $75.7.
Prices fell partly because the cuts were voluntary and investors had expected a steeper cut before the meeting. "The market reaction suggests that they are not fully convinced of the effectiveness of the cuts. However, the fact that they have a new framework for each member to cut also shows the trust and commitment among members," said Christyan Malek, an analyst at JP Morgan.
The International Energy Agency (IEA) this month cut its forecast for demand growth through 2024 as "the post-pandemic economic recovery begins to cool and new energy technologies become more widespread."
OPEC+ will also have a new member, Brazil - the world's 10th largest oil producer. Brazil's energy minister said they hope to join OPEC+ in January 2024.
Ha Thu (according to Reuters)
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