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OPEC+ nations consider delaying planned oil production increase

27 November 2024 10:33

Key members of the OPEC+ alliance are engaged in discussions about delaying the planned increase in oil production scheduled for January. 

Delegates suggested that the postponement could be extended for several months as the group reassesses market conditions, Caliber.Az reports via Bloomberg.

This marks the third potential deferral of a phased return of production. Previously, the coalition, led by Russia and Saudi Arabia, postponed plans to gradually restore 180,000–200,000 barrels per day (bpd) of output, which is part of the larger cut of 2.2 million bpd agreed upon by eight OPEC+ countries. The ongoing deliberations indicate growing concerns about whether the current market environment can accommodate increased supply at the start of 2024.

The discussions take place against a backdrop of strategic cooperation between major oil producers. On November 26, Russian Deputy Prime Minister Alexander Novak visited Baghdad, where he participated in a trilateral meeting with Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud and Iraqi Energy Minister Ziyad Ali Fadhel. Statements released by Saudi Arabia's Energy Ministry and the Russian government underscored the group's commitment to maintaining stability in the global oil market.

"The meeting emphasized the importance of maintaining stability and balance in global oil markets and noted the significant role played by the OPEC+ group in this regard," the statement read. It also highlighted the value of cooperation among OPEC+ members and their adherence to the production agreement, which includes voluntary cuts and the need to compensate for past overproduction.

For Iraq’s part, the country reaffirmed its full compliance with the agreement. "The Iraqi energy minister reaffirmed Iraq's full commitment to the agreement, voluntary production cuts, and compensation for production increases in accordance with the updated schedule submitted to the OPEC Secretariat," the press service of the Russian government stated.

OPEC+ ministers are expected to convene on December 1 in an online format to further discuss production strategies.

Since last year, eight OPEC+ nations — Algeria, Iraq, Saudi Arabia, Kuwait, the UAE, Kazakhstan, Russia, and Oman — have been implementing voluntary production cuts in two phases. The most recent reduction, totalling 2.2 million bpd, was initially intended to begin winding down in October 2024, with a gradual monthly increase of 180,000–200,000 bpd. However, in early September, the group decided to delay this adjustment by two months.

The alliance is also monitoring compliance among members who exceeded their production limits earlier in 2024. Iraq, Kazakhstan, and Russia have been identified as needing to offset their overproduction with additional reductions in the coming months. This process is crucial for maintaining the overall balance of the agreement and ensuring collective market stability.

By Tamilla Hasanova

Caliber.Az
Views: 379

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