OPEC+ Holds Firm on Oil Supply Policy Amid Soaring Prices

By Editor


Top ministers from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have opted to maintain existing oil supply policies, leading to a surge in international crude prices to their highest level in five months, nearing $90 a barrel.

The ministerial committee, Joint Ministerial Monitoring Committee (JMMC), consisting of key OPEC+ producers like Saudi Arabia, Russia, and the United Arab Emirates, met online to assess market conditions and members’ adherence to production cuts, Reuters news report said.

Oil prices have been on a steady upward trajectory this year, buoyed by supply constraints, geopolitical tensions, including attacks on Russian energy infrastructure, and conflicts in the Middle East. The price of brent crude settled at $89.35 per barrel on Wednesday, marking its highest level since October.

Brent Crude price March 2024
@ Google News

“OPEC+ decided to stick with oil supply cuts for the first half of the year, keeping global markets tight and potentially sending prices higher,” Saxo Bank’s Ole Hansen noted.

Last month, OPEC+ members, spearheaded by Saudi Arabia and Russia, agreed to extend voluntary output cuts of 2.2 million barrels per day (bpd) until the end of June to provide support to the market.

Following the meeting, OPEC+ released a statement acknowledging commitments from some countries to enhance compliance with output targets. Notably, Iraq and Kazakhstan pledged to achieve full conformity and compensate for overproduction, while Russia announced that its cuts in the second quarter would be based on production rather than exports.

According to the statement, countries with overproduced volumes in January, February, and March 2024 are required to submit detailed compensation plans to the OPEC Secretariat by April 30, 2024.

Russian Deputy Prime Minister Alexander Novak affirmed Russia’s full compliance with its oil supply reduction commitments under the OPEC+ agreement. However, data from S&P Commodity Insights (Platts) revealed that the group exceeded production limits by a net 275,000 bpd in January and 175,000 bpd in February, with Gabon, Iraq, and Kazakhstan being the primary contributors to the overproduction.

Iraq has pledged to decrease exports to offset its production exceeding OPEC targets, aiming to reduce shipments by 130,000 bpd from February levels.

As the voluntary cuts are set to expire at the end of June, total cuts by OPEC+ are slated to decrease to 3.66 million bpd, as previously agreed upon.

The panel scheduled its next meeting for June 1, coinciding with the next full OPEC+ meeting to deliberate on future policy decisions.

GreentechLead.com News Desk

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