According to rahnam news agency, quoted by Reuters, OPEC+ oil producers agreed on Thursday to reduce their production to 2.2 million barrels per day at the beginning of next year.
The price of oil fell by about 2% after this news was released, because on the one hand, this production cut is voluntary, and on the other hand, investors were expecting a deeper production cut before this summit was held.
Saudi Arabia, Russia and other members of the OPEC+ alliance, which produces 40 percent of the world’s oil, held an online summit on Thursday to discuss their oil supply policy.
Analysts believe that the market’s reaction to this plan shows uncertainty about the efficiency of this reduction in production.
But putting a framework for OPEC+ members to lower production shows the level of confidence and coordination among these members, especially that Brazil is going to join this coalition.
This summit was held in a situation to determine the level of production in 2024, when it is expected that the market will face an oversupply and the voluntary production reduction of one million barrels of Saudi Arabia will not continue in 2024.
OPEC+ oil production reaches 43 million barrels per day, which means that 5 million barrels of the production of this alliance have already been reduced to support oil prices and market stability.
In a statement after this meeting, OPEC announced that the total production reduction of OPEC+ reaches 2.2 million barrels per day, which was implemented by 8 producers and includes the voluntary production reduction of Saudi Arabia and Russia.
The 900,000 bpd of production cuts agreed on Thursday includes a 200,000 bpd reduction in fuel exports from Russia, with the rest being met by six other members.
Russian Deputy Prime Minister Alexander Novak said the country’s voluntary production cuts include crude oil and petroleum products.
The UAE announced that it will reduce its production by 163,000 barrels per day, and Iraq has agreed to a reduction of 220,000 barrels in the first quarter of next year.
Saudi Arabia, Russia, United Arab Emirates, Iraq, Kuwait, Kazakhstan and Algeria were among the producers who announced that this reduction in production will gradually decrease according to market conditions in the first quarter of 2024.
OPEC+ has focused on cutting production since oil prices fell from a peak of $98 in September, amid concerns about weak global economic growth and expectations of a supply glut.
OPEC+ has invited Brazil, which is among the top 10 producers in the world, to become a member of this coalition. Brazil’s energy minister announced that this will happen in January.
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