In a move aimed at bolstering oil prices, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, have reached an agreement to extend output cuts into 2024. The announcement came after a lengthy dispute with African members, which resulted in delays to the start of the group’s conference.
While specific details regarding the size of the supply reductions have not been disclosed, Saudi Arabia has committed to making additional voluntary cuts as part of the accord according to Reuters. The disagreement that led to the delay stemmed from the United Arab Emirates’ (UAE) push for a change to the baseline used to measure its output cuts. Delegates revealed that the UAE’s proposed adjustment would have come at the expense of African countries, who were being asked to give up some of their unused quota—a politically unfavorable option for them. Meanwhile, Russian Deputy Prime Minister Novak confirmed that Russia would extend its voluntary cut of 500,000 barrels per day until the end of December 2024
The recent extension of production curbs comes only two months after OPEC+ surprised the market with a cut. Initially, crude prices rallied following the announcement in April. However, weak economic data from China and concerns of a looming recession have weighed on oil futures, causing a decline of more than 10%throughout the month of May.
In anticipation of the meeting, Saudi Energy Minister Prince Abdulaziz bin Salman issued a warning to bearish speculators, signaling that the market should be vigilant. The ongoing negotiations and side meetings surrounding the agreement demonstrated the importance of resolving contentious issues within the group.
The agreement reached by OPEC+ serves as a testament to the group’s commitment to stabilize oil markets amidst global economic uncertainties.
