The Organization of Petroleum Exporting Countries and others (OPEC+) members have agreed to maintain their current supply curbs to the end of 2024, following a weekend of intense oil meeting in Vienna.
Similarly, quotas for 2024 were lowered for production stragglers, Nigeria, Angola, Azerbaijan, Malaysia, Congo and a few more countries.
Under the arrangement Nigeria’s quota was lowered to 1.38 million barrels a day in 2024.
The alliance’s total quota cuts were deepened to 4.7 million barrels a day b/d for July some five per cent of global capacity though in reality, many members have failed to hit their targets for years, making the actual physical reductions far less.
Under the agreement Saudi Arabia will slash its crude output by an extra 1 million b/d for at least July on top of its existing production cuts, energy minister Prince Abdulaziz bin Salman announced June 4 in a deal with OPEC+ counterparts, under the kingdom’s latest aggressive bid to reverse a tide of bearish trade sentiment and tighten the oil market.
The cuts come as many forecasts including OPEC’s own predict much higher global oil consumption in the months ahead, but Prince Abdulaziz described the decision as “precautionary.”
“We’re hedging,” he said at a press briefing. “We’re using the fundamentals to hedge. We will continue to hedge as long as we don’t see clarity and stability in the market.”
Analysts at S&P Global Commodity Insights expect 2.3 million b/d of annual demand growth in 2023, much of it backloaded to the second half of the year.
The OPEC’s latest monthly oil market report projects 2.3 million b/d of increased demand as well.
