OPEC+ delays unwinding voluntary production cuts

OPEC+ members Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman have agreed to extend their additional voluntary production cuts

The eight OPEC+ member countries, which previously announced additional voluntary cuts in April and November 2023, have agreed to extend their additional voluntary production cuts of 2.2mn bpd for two months until the end of November 2024, after which these cuts will be gradually phased out on a monthly basis starting 1st December, 2024, with the flexibility to pause or reverse the adjustments as necessary.

The cuts were originally planned to be phased out from the beginning of October.

The eight countries held a virtual meeting on 5 September 2024, during which they emphasised their collective resolve to ensure full compliance with the voluntary production adjustments. The group includes Iraq and Kazakhstan, who have overproduced since January 2024, but have strongly reaffirmed their commitment to the agreement. The two over-producing countries have also committed to meet compensation schedules for any over produced volumes and to compensate for the entire overproduced volume by September 2025.

The decision to delay unwinding production cuts comes as weak demand growth, ample supply and the prospect of increased Libya supplies have put a damper on the oil price, which currently stands at around US$73/bbl, its lowest level for 14 months.