OPEC+ members have committed to extending their voluntary oil output cuts of 2.2 million barrels per day (bpd) until the end of the second quarter. The move, led by Saudi Arabia and Russia, is intended to further support the oil market amid concerns regarding global growth and increasing output from non-OPEC+ countries.
Saudi Arabia, the de facto leader of OPEC, has committed to extending its voluntary cut of 1 million bpd until the end of June. With this, the country maintains its output at about 9 million bpd.
Similarly, Russia plans to cut an extra 471,000 bpd in oil production and exports during Q2, deepening its already substantial output cuts while easing export limits. Saudi and Russian-led initiatives have provided significant support to the oil market despite increasing concerns about economic growth.
Oil prices have also found support from escalating geopolitical tensions, the Houthi attacks on Red Sea shipping, and the surprise extension of Russia’s output cuts. Analysts believe the implementation of these cuts could boost oil prices further. The confirmation of a 2.2 million bpd cut comes as a surprise move welcomed by the market, which saw an 8% price increase for Brent crude since the start of the year.
Several OPEC+ countries, like Iraq, the UAE, and Kuwait, among others, also issued statements about maintaining their output reductions in Q2. Non-member Kazakhstan pledged to further extend its voluntary cuts of 82,000 bpd through Q2.
OPEC+ has been implementing a series of output cuts since late 2022 in response to rising output from non-member producers like the United States, coupled with questionable demand as major economies face high interest rates.
The oil market, however, remains uncertain as OPEC and the International Energy Agency have differing views on demand growth for the year. Also, a potential headwind for OPEC+ is the potential for an estimated record high oil supply globally, driven mostly by non-member countries.
1. Opec Press Release
2. CNBC Article, “Saudi Arabia, Russia and several OPEC+ producers extend voluntary crude supply cuts until end of June,” Ruxandra Iordache
3. OPEC Press Release, “Several OPEC+ countries announce extension of additional voluntary cuts of 2.2 million barrels per day for the second quarter of 2024”