Global Oil Giants Intensify OPEC+ Production Cuts with Saudi Arabia and Russia Leading

Last Updated on March 4, 2024 1:29 pm

Major oil-producing nations, primarily led by Saudi Arabia and Russia, are once again ramping up their voluntary crude supply cuts, according to recent announcements from the OPEC+ countries. The multinational organization confirmed on Sunday that several members are extending reductions, totaling around 2.2 million barrels a day. Saudi Arabia is taking the forefront by extending its previously implemented cut of 1 million barrels a day through the end of the second quarter in 2024.

The extension, disclosed by the state-owned Saudi Press Agency citing an Energy Ministry source, implies that the kingdom’s crude production will hover around 9 million barrels a day until the end of June. Russia has also declared an additional voluntary cut of 471,000 barrels per day for the second quarter, affecting both production and exports.

Other OPEC+ members, including Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, will continue with reductions, albeit in smaller amounts, as reported by OPEC’s secretariat. The ongoing production cuts, initiated since October 2022, are strategically aimed at balancing the global oil market, with a gradual return of volumes contingent on market conditions.

Despite the recent increase, the price of Brent crude, the international benchmark, remains modest at around $83.55 per barrel as of last week, up from $77.33 observed a month ago. This price level is notably lower than the surging oil prices witnessed following Russia’s invasion of Ukraine in 2022, aligning with analysts’ previous expectations.

Sunday’s extension of production cuts adds to the voluntary reductions announced in April 2023, set to continue through December of this year, including 500,000 barrel-a-day cuts from both Saudi Arabia and Russia.