OPEC+ members, led by Saudi Arabia and Russia, have announced further voluntary cuts of 2.2 million barrels per day (mbpd) for another three months, “aimed at supporting the stability and balance of oil markets”, the organisation announced on its website.

At 14:22 GMT, Brent futures increased by $0.19 to $83.74 a barrel, following a 2.4% increase last week. After a 4.6% surge last week, US West Texas Intermediate (WTI) rose by $0.06 to $80.03 a barrel, Reuters reported.

Strategically responding to the challenges posed by increased US production and weak global demand, OPEC+ members have implemented a series of production cuts since 2022. These measures, including the latest voluntary cuts that commenced in January, have significantly reduced the combined production targets of member countries by around 2.2mbpd amid rising global geopolitical tensions.

These additional voluntary cuts are endorsed by OPEC+ member countries like Algeria, Iraq, Kazakhstan, Kuwait, Oman, Saudi Arabia and the United Arab Emirates for the second quarter (Q2) of 2024. “Afterwards, to support market stability, these voluntary cuts will be returned gradually subject to market conditions,” the press release said.

On Sunday, Russia announced an additional voluntary cut of 471,000 barrels per day (bpd) for Q2, which includes a blend of production and exports. “Russia’s voluntary production cut is in addition to the voluntary cut of 500,000bpd previously announced in April 2023, which extends until the end of December 2024. The export cut will be made from the average export levels of the months of May and June of 2023,” according to the announcement. 

According to the latest estimates from the US Energy Information Agency, crude oil prices are expected to increase from $78 per barrel (bbl) in December 2023 to $85/bbl in March 2024. This rise is attributed to the OPEC+ production cuts, resulting in global stock draws of 810,000bpd during Q1 2024.

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On 21 December, Angola announced its exit from the OPEC group of oil exporters amid the production cuts, which have sparked tensions among member countries.

Jorge Leon, a senior vice-president at Rystad Energy, stated that the OPEC+ cuts would result in reduced production from the group during Q2, with output levels expected to be at 34.6mbpd, as reported by Reuters. Previously, it was predicted that output levels could exceed 36mbpd in May as producers unwind supply cuts.