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OPEC+ Reaches Preliminary Agreement to Deepen Oil Production Cuts

As OPEC+ is holding its meeting on Thursday, delegates and sources in the cartel and the wider group are telling media sources that there could be further cuts to the alliance's production early next year.  

A preliminary agreement has been reached that OPEC+ could cut more than 1 million barrels per day (bpd) next year, including Saudi Arabia extending its voluntary cuts and additional cuts from other members of the group, two sources at OPEC+ told Reuters.

Saudi Arabia, the leader of OPEC and its top producer, has won provisional approval for additional cuts, to which other OPEC+ members will contribute, too, sources close to the Saudis have told the Financial Times.

The Kingdom has reportedly won support for a further OPEC+ production cut of around 1 million bpd, but the figure is provisional and could be higher or lower, sources with knowledge of the Saudi thinking told FT.

At the time of writing, an OPEC meeting was concluded and is being followed by a meeting of the OPEC+ panel, the Joint Ministerial Monitoring Committee (JMMC). The final meeting, where all decisions will be taken, will be of the full OPEC+ group.

Saudi Arabia has warned other OPEC+ members that it could unwind its voluntary 1 million bpd cut if other producers don't agree to cut deeper, delegates told FT.

The United Arab Emirates (UAE), OPEC's third-largest producer, is reportedly on board with group-wide cuts as it already won a higher quota for 2024 earlier this year, according to FT.

The oil market is closely watching the meeting and prices popped early on Thursday amid reports (and hopes) that OPEC+ could announce deeper cuts. Oil prices were up by 1% early on Thursday ET - an hour before the full OPEC+ online meeting began. The meeting was delayed from November 26 to November 30 amid what market talk says were disagreements over the quotas of the African OPEC members.   

By Tsvetana Paraskova for Oilprice.com

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Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.  More

Comments

  • Mamdouh Salameh - 30th Nov 2023 at 8:05am:
    The Saudi voluntary production cut could become a permanent fixture of the global oil market because of Saudi production difficulties.

    Moreover, OPEC Plus has no need for more cuts because the fundamentals in the market are solid and global demand is robust.

    By making new cuts they play into the hands of speculators and oil traders by accepting their claim that demand is weak which isn’t the case. This will force oil prices further down.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
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