The members of the Organization of the Petroleum Exporting Countries and its allies, (OPEC+) have agreed to keep current oil production levels unchanged.
The announcement resulted in a rise in oil prices on Wednesday, which approached the $90 a barrel mark due to expectations that the voluntary output cuts of 2.2 million barrels per day would remain in place until the end of June.
Brent, the benchmark for two-thirds of the world’s oil, was trading 0.73% higher at $89.57 a barrel at 4.50 pm UAE time, while West Texas Intermediate, was up 0.66% at $85.71 a barrel.
“OPEC+ decided to stick with oil supply cuts for the first half of the year, keeping global markets tight and potentially sending prices higher,” said Saxo Bank’s Ole Hansen.
During the meeting, the organisation welcomed pledges from Iraq and Kazakhstan to achieve full conformity and to compensate for overproduction. It also celebrated Russia’s announcement that its cuts in the second quarter will be based on production not exports, the statement said.
Moreover, the organisation reiterated the need for countries that are producing above their quotas to scale back and compensate for the excess output.
“Participating countries with outstanding overproduced volumes for the months of January, February and March 2024 will submit their detailed compensation plans to the Opec Secretariat by 30 April 2024,” OPEC said.
Oil prices have increased by 16% in the first three months of 2024, mainly driven by supply cuts and geopolitical tensions. In January, Aramco revealed it will not aim to increase its maximum sustainable capacity (MSC) to 13 million barrels per day, as originally planned, following a government directive.
The next meeting is scheduled for June 1, 2024.
