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Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

OPEC+ Announces Fresh Output Cuts until 2024 to Boost Oil Price


Sun 04 Jun 2023 | 11:49 PM
H-Tayea

Major oil producers led by Saudi Arabia and Russia met on Sunday to discuss slashing output further in a bid to prop up prices.

The 13-member Organization of the Petroleum Exporting Countries (OPEC) is consulting with 10 other oil majors, including Russia, to review the grouping’s future output policy. The in-person OPEC+ meeting is expected to start at the group’s headquarters in Vienna around midday local time (1000 GMT), two hours later than originally scheduled.

Analysts had largely expected OPEC+ producers to maintain their current policy, but signs emerged this weekend that the 26 countries may make deeper cuts. In April, several OPEC+ members agreed to voluntarily cut production by more than one million barrels per day (bpd) — a surprise move that briefly buttressed prices but failed to bring about lasting recovery.

Oil producers are grappling with falling prices and high market volatility amid Russia’s conflict with Ukraine, which has upended economies worldwide.

Most delegations remained tight-lipped as they arrived at the headquarters on Sunday.

Analysts are divided over whether heavyweights Riyadh and Moscow will keep the group on course with its current output policy, or further curtail production.

An output cut of 700,000 bpd to one million bpd was one of the options being discussed, a source close to the discussions told AFP, while emphasising that nothing was set in stone.

All options remain “on the table”, Iran’s OPEC governor Amir Hossein Zamaninia told AFP on Saturday.

Oil prices have plummeted by about 10 percent since the April cuts were announced, with Brent crude falling close to $70 a barrel, a level it has not traded below since December 2021.

Traders worry that demand will slump, with concerns about the health of the global economy as the United States battles inflation with higher interest rates and China’s post-Covid rebound stutters.

Tough negotiations between major oil producers led by Riyadh and Moscow were under way on Sunday to consider slashing output further in a bid to prop up prices.

The 13-member Organization of the Petroleum Exporting Countries (OPEC) headed by Saudi Arabia was consulting with 10 other oil majors, including Russia, to review the grouping’s future output policy.

The in-person OPEC+ meeting — which started three hours later than originally scheduled — was dragging on through Sunday afternoon at the group’s headquarters in Vienna, a source close to the talks told AFP.

Analysts had largely expected OPEC+ producers to maintain their current policy, but signs emerged this weekend that the 23 countries may make deeper cuts.

An output cut of one million barrels per day (bpd) was being discussed, according to the source close to the talks.

In April, several OPEC+ members agreed to cut production voluntarily by more than one million bpd — a surprise move that briefly buttressed prices but failed to bring about lasting recovery.

Bloomberg news agency reported a fight with the grouping’s African members threatened to derail the gathering.

While the United Arab Emirates was pushing for a change to the way its output cuts are measured, African countries were reluctant to give up some of their unused quotas — a politically unpalatable option, it said, citing delegates.

Several OPEC+ nations — including Angola and Nigeria, already seeming to be at maximum capacity — have struggled to meet their quotas.

Oil producers are grappling with falling prices and high market volatility amid the Russian invasion of Ukraine, which has upended economies worldwide.

Most delegations remained tight-lipped as they arrived at the headquarters on Sunday.

Analysts are divided over whether heavyweights Riyadh and Moscow will keep the group on course with its current output policy, or further curtail production.

On arriving in Vienna on Saturday, Emirati energy minister Suhail Mohamed Al Mazrouei said he expected the outcome of Sunday’s meeting to “balance the market and ensure we are ready for any challenges in the future”.

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