OPEC+ oil producers have reached an agreement to implement voluntary output cuts of approximately 2 million barrels per day (bpd) for early next year.
The decision was made during a virtual meeting held on Thursday, with Saudi Arabia leading the way by extending its current voluntary cut.
The agreement comes as OPEC+ members, who collectively account for over 40% of the world’s oil supply, grapple with concerns about a potential surplus in the market. The group’s output, which currently stands at around 43 million bpd, already incorporates cuts of about 5 million bpd aimed at supporting prices and stabilizing the market.
In addition to Saudi Arabia’s extended voluntary cut, Russia has also pledged to maintain its voluntary cut of 500,000 bpd for the first quarter of 2024. Algeria and Kazakhstan have also committed to output reductions of 50,000 bpd and 82,000 bpd, respectively, during the same period.
The decision to implement voluntary output cuts has had a mixed impact on oil prices. Benchmark Brent crude for February futures initially rose by more than 1% following the announcement but later retreated to end the day down 1.6% at $81.52 a barrel.
OPEC+ has also extended an invitation to Brazil, a major oil producer, to join the group. Brazil’s energy minister has expressed the country’s hope to join the alliance in January 2024.
The OPEC+ meeting took place as the United Nations’ COP28 climate summit, hosted by OPEC member the United Arab Emirates, commenced. The focus on lower oil production amidst environmental concerns highlights the delicate balance OPEC+ faces in managing the global oil market.
