By Ken Afor
OPEC+ oil producers, Thursday, came to an accord to implement a collective production cut of approximately 2 million barrels per day (bpd), led by the continuation of Saudi Arabia’s current voluntary reduction, as per Reuters.
A virtual meeting was held among Saudi Arabia, Russia, and other members of OPEC+, who are producing more than 40% of the world’s oil, to debate the output for 2024.
This meeting was due to worries of a potential oil surplus in the market.
The volume of their production, of approximately 43 million barrels per day, has already been decreased by 5 million barrels per day in order to bolster prices and bring about equilibrium in the market.
Sources from OPEC+ informed Reuters that the newest agreement would consist of voluntary reductions close to 2 million bpd, with Saudi Arabia extending the 1 million bpd voluntary reduction that has been in place since July.
One source said that Russia would decrease a quantity of 500,000 bpd and other members will have to make cuts also.
The Energy Minister of Algeria revealed to the outlet that the nation had consented to reduce its output by 50,000 barrels per day.
After an increase of more than 1% earlier in the day, OPEC+ producers agreed on cuts, causing oil prices to decline. At 1634 GMT, benchmark Brent crude for February futures dropped 3% to a price below $81 per barrel.
The January contract, however, is set to finish this Thursday.
OPEC+ is aiming to reduce output due to the falling prices from September’s nearly $98 and worries about a potential decline in economic growth in 2024, as well as an anticipated surplus in supply.
The International Energy Agency (IEA) this month has projected a deceleration in 2024 demand expansion as “the last phase of the pandemic economic rebound dissipates and as advancing energy efficiency gains, expanding electric vehicle fleets and structural factors reassert themselves.”
Discussions were proving hard for OPEC+, hence why their planned November 26 gathering was put off, sources stated this week.
However, it appears that there was discord over quotas for African producers that caused the delay.
The United Arab Emirates, being an OPEC member, is hosting the United Nations’ COP28 climate Summit which coincides with the OPEC+ meeting.
