Oil-producing countries within the OPEC+ alliance, including Saudi Arabia and Russia, have decided to deepen their voluntary crude supply cuts in an effort to stabilize the global oil market. The latest round of announcements from OPEC+ members involves extending reductions of approximately 2.2 million barrels per day.
Saudi Arabia, a key player in the alliance, has committed to extending its existing cut of 1 million barrels per day until the end of the second quarter of 2024. This decision, confirmed by the Saudi Press Agency citing a source from the Energy Ministry, will keep the kingdom's crude production at around 9 million barrels per day through June.
Meanwhile, Russia has announced an additional voluntary cut of 471,000 barrels per day for the second quarter, affecting both production and exports. Other OPEC+ members such as Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman will also continue with smaller reductions, as outlined by OPEC's secretariat.
The ongoing production cuts by OPEC+ countries, which have been gradually implemented since October 2022, are aimed at achieving a balance in the oil market. These countries have indicated that they will gradually increase production levels based on market conditions.
Despite a recent uptick, the price of Brent crude, the international benchmark, remains relatively stable at around $83.55 per barrel as of the end of last week, compared to $77.33 a month earlier. This price level, while higher, is still considered moderate and is significantly lower than the peak prices observed after Russia's invasion of Ukraine in 2022, aligning with analysts' previous forecasts.
The latest extension of cuts announced on Sunday builds upon the voluntary reductions that were initially disclosed in April 2023 and are set to continue until the end of this year. Both Saudi Arabia and Russia had previously committed to reducing production by 500,000 barrels per day each.
