OPEC+ meeting held today noted and approved the following voluntarily production adjustment announced on 2 April 2023 by Saudi Arabia (500 thousand b/d); Iraq (211 thousand b/d); United Arab Emirates (144 thousand b/d); Kuwait (128 thousand b/d); Kazakhstan (78 thousand b/d); Algeria (48 thousand b/d); Oman (40 thousand b/d); and Gabon (8 thousand b/d) starting May until the end of 2023. These will be in addition to the production adjustments decided at the 33rd OPEC and non-OPEC Ministerial Meeting.
The above will be in addition as well to the announced voluntary adjustment by the Russian Federation of 500 thousand barrels per day until the end of 2023, which will be from the average production levels as assessed by the secondary sources for the month of February 2023.
This new voluntary cut, that may be adopted by other crude oil producers as well, will surely result in price hikes in petrol and derivative products, resulting in higher inflation rates than expected, specially when China resumes economic activity after the COVID 0 related meassures are completely lifted in the PRC.
OPEC+ meeting noted that this is a precautionary measure aimed at supporting the stability of the oil market.
The price of OPEC basket of thirteen crudes stood at $77.53 a barrel on Thursday, compared with $77.72 the previous day, according to OPEC Secretariat calculations.
After the production cuts announcement this monday the price per barrel of Brent crude, the global benchmark rose a 5.31% to $84.13 a barrel. The price of WTI , the US benchmark, went up 5.48% to $79.83. Both were the sharpest price rises in almost a year.
Russia blames US bank crisis for the additional crude oil production cuts approved by OPEC
“We are seeing many uncertainties : volatile demand, supply, and oil prices, and a reduction of investment in the oil industry.
The banking crisis in Europe and the United States is seriously affecting the oil market. Importantly, the additional voluntary reduction has not been launched by OPEC+.
As of today, nine of 23 OPEC+ countries have joined this initiative. Other countries may follow suit if they deem it necessary. The main goal is to make the market more stable and predictable,” Alexander Novak (Vice Prime Minister of The Russian Federartion said.
Sure that price caps and import bans imposed by the USA, the EU and other countries on Russian crude have dammaged Russian interests, but also opened a window of chance for other producers, even for the USA inside its domestic market and in the European Union. One can imagine that Russia has found an alternative cient in the PRC but perhaps at no so high prices the Russian Federation is used to.
EU economy dependency on imported petrol oil and the fact that USA is a producer of oil that also imports this ressource from other countries show the geo political and economic importance of OPEC+ decissions on production cuts and prices.
Some experts have seen in today’s approval for the voluntary cuts of oil production in Saudi Arabia and Russia a change in the consideration for the United States of America (USA) that now is treated more as another producer among OPEC and not OPEC oil producing States than as the leading country in the world.
Maintaining DoC till end of 2023 and Next OPEC + meeting in June
The OPEC+ members agreed to hold the next meeting of the OPEC+ Joint Ministerial Monitoring Committee and the OPEC+ Ministerial Meeting on 4th June 2023.
The Members of OPEC’s Joint Ministers Commitee reaffirmed their commitment to the The Declaration of Cooperation (DoC) which extends to the end of 2023 as decided at the 33rd OPEC and non-OPEC Ministerial Meeting (ONOMM) on 5th of October 2022, and urged all participating countries to achieve full conformity and adhere to the compensation mechanism.
The DoC constitutes an unprecedented milestone in the history of the Organization of the Petroleum Exporting Countries (OPEC). For the first time ever, OPEC Member Countries coordinated with 11 non-OPEC oil producing countries (now 10 – Equatorial Guinea became an OPEC Member in May 2017) in a concerted effort to accelerate the stabilization of the global oil market.