On Thursday, November 30th local time, the OPEC Secretariat announced on its official website that several OPEC+member countries have announced additional voluntary production cuts, with a total reduction of 2.2 million barrels per day, to support the stability and balance of the oil market.
According to the press release, out of the 2.2 million barrels per day reduction in production, Saudi Arabia has 1 million barrels per day, Iraq has 223000 barrels per day, the United Arab Emirates has 163000 barrels per day, Kuwait has 135000 barrels per day, Kazakhstan has 82000 barrels per day, Algeria has 51000 barrels per day, and Oman has 42000 barrels per day.
The OPEC Secretariat stated that the deadline for these production reduction measures is from January to the end of March 2024. The press release stated that in order to support the stability of the oil market, it will gradually recover after the end of March next year based on market conditions.
It should be pointed out that Saudi Arabia's 1 million barrels per day production reduction is a continuation of the production reduction measures that began in July this year. This means that the country's production in the first quarter of next year will remain around 9 million barrels per day, similar to the second half of this year.
Meanwhile, Russia announced that it will voluntarily reduce production by 500000 barrels per day in the first quarter of next year, including 300000 barrels of crude oil and 200000 barrels per day of refined oil. Similar to Saudi Arabia, Russia's 300000 barrels per day of 500000 barrels per day is a continuation of this year's measures, with an additional production reduction of 200000 barrels per day.
In summary, most of the actual cuts made by OPEC+at this meeting are a continuation of this year's production reduction measures. According to media calculations, the new cuts are around 900000 barrels per day.
In short, the organization's production in the first quarter of next year was only about 900000 barrels per day lower than the second half of this year, which was lower than the previous market expectation of 1 million barrels per day.
Internal disagreements still exist
The analysis points out that the announcement of "voluntary production cuts" rather than "collective production cuts" by OPEC+also reflects its internal differences.
Price Futures Group analyst Phil Flynn stated that traders are concerned that the production reduction is voluntary rather than mandatory, which raises questions in the market about whether member countries will follow up and implement the reduction.
Another press release shows that according to OPEC+quotas, Angola's production is set at 1.1 million barrels per day and Nigeria's production is set at 1.5 million barrels per day. Shortly before the publication, it was reported that the Angolan minister refused OPEC's oil production quota and stated that the country would maintain production at 1.18 million barrels per day.
John Kilduff, partner at Again Capital, stated that there are significant issues with OPEC+'s cohesion and compliance in reducing production. He added that this organization is being squeezed by record production from external countries such as the United States, and they are also losing market share in Asian countries.
As of the time of publication, the international crude oil price benchmark - Brent crude oil - has expanded its decline to 2%, at $80.93 per barrel; The US WTI crude oil price fell 2.7% to $75.74 per barrel.
The OPEC Secretariat also announced that Brazil will join the OPEC+Charter of Cooperation from January 2024. However, the Brazilian Minister of Mines and Energy stated that the country is "analyzing" the invitation to become an OPEC+member. The Brazilian Presidential Office also responded that the government has not yet responded to the invitation.
The OPEC+representative also mentioned that even if Brazil joins the organization in January next year, it will not immediately participate in OPEC+'s oil production reduction actions.