June 22, 2024

OPEC+ to review oil cut extension in March

By Our Reporter

OPEC+ will take decision in March whether or not to give extension to voluntary oil production cuts in place for the first quarter, two OPEC+ sources said on Thursday after a ministerial panel meeting made no changes to the group’s output policy.

Recall that last November, OPEC+ agreed to voluntary output cuts totaling about 2.2 million barrels per day (bpd) for the first quarter of this year led by Saudi Arabia rolling over a 1 million bpd voluntary reduction.

Oil prices have found support from expectations of interest rate cuts and amid rising geopolitical tensions, notably attacks by the Iran-aligned Houthi group on Red Sea shipping. Brent crude was trading above $81 a barrel on Thursday.

The two OPEC+ sources, who declined to be identified, said the cuts will be reviewed in March and an announcement will then be made when they are up for renewal as has been customary with OPEC+ voluntary cuts so far.

Earlier on Thursday, leading ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies, led by Russia, known as OPEC+, met online to discuss the market and oil output levels, and made no changes to policy.

“The meeting was a very healthy, quick meeting and what we noticed is that there is good cohesion among members. There was reiteration of commitments,” another OPEC+ source said.

The panel, known as the Joint Ministerial Monitoring Committee (JMMC) can call for a full OPEC+ meeting or make recommendations on policy if needed.

If the first quarter voluntary cuts are unwound, OPEC+ would begin to return 2.2 million bpd to the market from the beginning of April. This would leave in place 3.66 million bpd of output cuts agreed earlier.

Riyadh has said that the cuts could continue beyond the first quarter if needed. Previous decisions to extend voluntary cuts have been made at least a month before their implementation.

The Saudi government, in a surprise announcement this week, ordered state oil company Aramco (2222.SE), opens new tab to halt its oil capacity expansion plan and to target a maximum sustained production capacity of 12 million bpd, 1 million bpd below a target announced in 2020.

Russian Deputy Prime Minister Alexander Novak said on Thursday, after participating in the OPEC+ meeting, that the situation in the oil market is stable.

The JMMC usually meets every two months and brings together leading OPEC+ countries, including Saudi Arabia, Russia and the United Arab Emirates. The next meeting is on April 3.
( With additional information from Reuters)