OPEC+ Extends Oil Output Cuts To The Second Quarter

(CTN News) – Sources said on Sunday that OPEC+ members led by Saudi Arabia and Russia agreed to extend voluntary oil production cuts into the second quarter, providing additional support to the market amid concerns about global economic growth.

According to Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), the country will extend its voluntary cut of 1 million barrels per day (bpd) through the end of June, leaving its production at roughly 9 million barrels per day.

It is expected that the cuts will be reversed gradually, depending on market conditions, according to the state news agency SPA.

In coordination with some OPEC+ participating countries, Russia, the leader of allies collectively known as OPEC+, will reduce oil production and exports by an additional 471,000 barrels per day (bpd) in the second quarter.

The OPEC+ countries agreed in November to voluntary cuts totaling about 2.2 million barrels per day (bpd) for the first quarter, led by Saudi Arabia, which extended its own voluntary cut for another quarter.

The cuts are announced individually by each member of OPEC+.

In separate statements, Iraq said it would extend its output cuts of 220,000 barrels per day, the UAE said it would extend its production cuts of 163,000 barrels per day, and Kuwait said it would extend its production cuts of 135,000 barrels per day. Additionally, Algeria and Oman have announced cuts of 51,000 barrels per day and 42,000 barrels per day, respectively.

Due to rising output from the United States and other non-member producers and concerns over demand as major economies grapple with high interest rates, OPEC+ has implemented a series of output cuts since late 2022 in a bid to support the market.

Despite rising geopolitical tensions caused by attacks by the Iran-aligned Houthi group on Red Sea shipping, oil prices have been supported by economic growth concerns and high interest rates. A barrel of Brent futures for May settled Friday at $83.55 a barrel, an increase of $1.64, or 2%.

One source told Reuters last week that OPEC+ was considering extending output cuts into the second quarter.

It is uncertain whether oil demand will increase this year. In addition to 2.25 million barrels per day of growth expected from OPEC, the International Energy Agency anticipates a much slower growth of 1.22 million barrels per day.

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