OPEC+ leaves oil production levels unchanged, to review production cut extension in March

OPEC+ will decide in March whether or not to extend voluntary oil production cuts in place for the first quarter, two OPEC+ sources said on Thursday after a ministerial panel meeting made no changes to the group’s output policy.

Last November, OPEC+ agreed to voluntary output cuts totalling about 2.2 million barrels per day (bpd) for the first quarter of this year led by Saudi Arabia rolling over a 1 million bpd voluntary reduction.

Oil prices have found support from expectations of interest rate cuts and amid rising geopolitical tensions, notably attacks by the Houthi group on Red Sea shipping. Brent crude was trading above $81 a barrel on Thursday.

The two OPEC+ sources, who declined to be identified, said the cuts will be reviewed in March and an announcement will then be made when they are up for renewal as has been customary with OPEC+ voluntary cuts so far.

Organization of the Petroleum Exporting Countries (OPEC) member Algeria said on Thursday it was ready to carry on with its voluntary cut beyond March if needed, while Kuwait said it was committed to the curbs without saying whether they should be extended.

OPEC meet

Earlier on Thursday, leading ministers from the OPEC and allies, led by Russia, known as OPEC+, met online to discuss the market and oil output levels, and made no changes to policy.

“The meeting was a very healthy, quick meeting and what we noticed is that there is good cohesion among members. There was reiteration of commitments,” another OPEC+ source said.

The panel, known as the Joint Ministerial Monitoring Committee (JMMC) can call for a full OPEC+ meeting or make recommendations on policy. It reviewed November and December oil production data and noted a “high conformity” of countries with output decisions, OPEC said in a statement after the meeting.

OPEC’s statement highlighted compliance, saying the “committee will continue to monitor” countries’ conformity with output decisions made in June 2023, the November 2023 voluntary cuts and an earlier voluntary cuts round in April 2023.

If the first quarter voluntary cuts are unwound, OPEC+ would begin to return 2.2 million bpd to the market from the beginning of April. This would leave in place 3.66 million bpd of output cuts agreed earlier.

Riyadh has said that the cuts could continue beyond the first quarter if needed. Previous decisions to extend voluntary cuts have been made at least a month before their implementation.

The Saudi government, in a surprise announcement this week, ordered state oil company Aramco to halt its oil capacity expansion plan and to target a maximum sustained production capacity of 12 million bpd, 1 million bpd below a target announced in 2020.

China and India alone are set to account for more than a third of the global economy in 2045. The OECD region’s share of the global economy is expected to drop from 46% in 2022 to 34% in 2045. pic.twitter.com/tv3f48EYhg

— OPEC (@OPECSecretariat) February 1, 2024

Stable outlook

Russian Deputy Prime Minister Alexander Novak said on Thursday, after participating in the OPEC+ meeting, that the situation in the oil market is stable.

The JMMC usually meets every two months and brings together leading OPEC+ countries, including Saudi Arabia, Russia and the United Arab Emirates. The next meeting is on April 3.