Business News

Crude Oil Falls as OPEC+ Agrees Voluntary Output Cuts

crude oil 1.27 million barrels per day

By Adedapo Adesanya

Crude oil prices fell on Thursday members of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) agreed to voluntary output cuts for the first quarter of next year, falling short of market expectations.

As a result, Brent crude futures lost 27 cents or 0.3 per cent to close at $82.83 per barrel, and the US West Texas Intermediate (WTI) crude futures went down by $1.90 or 2.4 per cent to $75.96 a barrel.

On a monthly basis, Brent fell by 5.2 per cent while WTI was down by 6.2 per cent.

Saudi Arabia, Russia and other members of OPEC+, who pump more than 40 per cent of the world’s oil, agreed to voluntary output cuts approaching 2 million barrels per day for the first quarter of 2024.

The cuts agreed to at the meeting were voluntary, they were announced not by the group, but by the individual member states.

Algeria agreed to cut oil production by another 51,000 barrels per day, Kazakhstan agreed to reduce oil output by an additional 82,000 barrels per day, Saudi Arabia agreed to extend its 1 million barrels per day output cut, and Russia’s Deputy Prime Minister Alexander Novak said that his country would deepen voluntary oil export cuts by 300,000 barrels per day, adding it would roll over the existing 500,000 barrels per day voluntary production cuts.

Oman will cut another 42,000 barrels per day, Iraq will voluntarily cut 211,000 barrels per day, Kuwait will cut 135,000 barrels per day, and the United Arab Emirates will cut 163,000 barrels per day.

At least 1.3 million barrels per day of those cuts, however, were an extension of voluntary curbs that Saudi Arabia and Russia already had in place.

Saudi Arabia warned other OPEC+ members that it could unwind its voluntary 1 million barrels per day cut if other producers don’t agree to cut deeper.

It was joined by Russia, Kuwait, Kazakhstan and Algeria saying cuts would be unwound gradually after the first quarter, market conditions permitting.

The meeting, being held on the same day as global leaders gather in Dubai for the UN climate conference, was originally scheduled for last week but was deferred because of disagreements over output quotas for African producers.

OPEC+ also invited Brazil, a top 10 oil producer, to become a member of the group. The country’s energy minister said it hoped to join in January.

Angola did not announce an additional voluntary cut, instead, it publicly rejected its current quota, and reiterated its proposal for a 1.18 million barrel quota beginning in January. It added that it will not stick to the new OPEC quota.

The next OPEC+ meeting is scheduled for June 1, 2024.

Meanwhile, crude output in the US, the world’s top producer, continued to grow, rising 1.7 per cent in September to a monthly record of 13.24 million barrels per day, the Energy Information Administration (EIA) said.