OPEC+ states to further cut oil production
Several members of the OPEC+ group, including Saudi Arabia and Russia, the cartel’s two biggest oil producers, have begun reducing crude output. The cuts, starting from May and lasting until the end of 2023, are expected to support global oil prices.
In particular, Saudi Arabia and Iraq have started reducing oil production by 500,000 barrels per day (bpd) and 211,000 bpd respectively. Meanwhile, the UAE, Kuwait and Kazakhstan are slashing production of oil by 144,000 bpd, 128,000 bpd and 78,000 bpd respectively.
Algeria and Oman have also joined the voluntary output reduction, with the former cutting production of crude by 48,000 bpd and the latter by 40,000 bpd. Gabon will see its output reduced by 8,000 bpd.
Earlier this year, Russia’s Deputy Prime Minister Alexander Novak said that Russian producers would extend a voluntary reduction in oil output of 500,000 bpd from the average February level until the end of the current year.
The total oil output downfall is expected to amount to 1.66 million barrels per day.
The production cuts are aimed at supporting oil prices, which had declined by more than 20% in the twelve months through April 5. The measure is also expected to mitigate the impact on crude oil prices of a sluggish global economy and of the fallout from the banking crisis in the US.
The latest decision came as an additional step to the agreements to collectively reduce oil output by two million bpd that came into effect in November 2022 and came as part of the OPEC+ deal.
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