OPEC+ Extends Production Cuts thru 2024

By Glenn Dyer | More Articles by Glenn Dyer

The OPEC+ group has extended its latest production cuts of 1.16 million barrels a day to the end of next year and the Saudis have also added an extra cut of half a million barrels a day as they realise the cuts last October and April of this year have failed to keep support prices at the high levels they want.

On April 3, several producers of the Organization of the Petroleum Exporting Countries and its partners —a group known as OPEC+ — revealed a combined 1.66 million barrels per day of production declines until the end of this year.

That was on top of the October 2022 cut of 2 million barrels a day.

OPEC+ extended the April and October cuts till the next of 2024 and the Saudis announced an additional  half a million-per-day voluntary (on top of the 500,000 announced in April) starting in July.

Interestingly Russia merely extended its April 500,000 barrel cut (if it has happened) along with other members of the OPEC+ group. OPEC agreed to their cuts on Saturday and Sunday saw the Saudis add the 500,000 barrels and Russia extend its cut in a done deal with little reported debate.

The OPEC+ group otherwise collectively decided to stick to its targets for 2023, with production at 40.463 million barrels a day next year.

On Sunday, the Saudi oil minister defended the voluntary moves as precautionary.

Saudi Energy Minister Prince Abdulaziz bin Salman defended the April output cuts which he noted were first criticised as likely to spike crude prices — then, as failing to support them.

They did push prices higher – to more than $US87 a barrel for the global benchmark, Brent – that was up around $US9 a barrel. But prices then tipped lower and got to $US72 a barrel last week before rumours of the new cuts emerged.

US West Texas Intermediate style crude bottomed out well under $US70 a barrel last week after peaking at more than $US83 a barrel post the April cuts.

News of the cuts pushed WTI prices up slightly by around 0.2% in early Asian trading Monday.

The ASX prices of our major oil and gas groups like Woodside, Santos and Beach will edge higher today in the wake of the Saudi-driven deal but the bigger influence will be the removal of the US debt crisis concerns and the continuing very narrow tech boom on Wall Street.

An even though the Saudis banned Reuters and the Wall Street Journal from the meetings in Vienna at the weekend, the news groups were ahead of the pack with reports of the way the Saudis were driving the latest deal, especially the new production cut.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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