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Monday, April 3, 2023
In a surprise move, Saudi Arabia announced on Sunday that OPEC+ oil producers will cut oil production by an additional 1.16 million barrels per day (bpd), raising fears of significant price hikes and the likelihood of putting further pressure on global economies.
In a press release on its website Monday morning, OPEC said the Joint Ministerial Monitoring Committee (JMMC) made up of OPEC and non-OPEC countries, noted the additional voluntary production adjustments announced on April 2 by Saudi Arabia (500 thousand bpd); Iraq (211 thousand bpd); United Arab Emirates (144 thousand bpd); Kuwait (128 thousand bpd); Kazakhstan (78 thousand bpd); Algeria (48 thousand bpd); Oman (40 thousand bpd); and Gabon (8 thousand bpd) starting May until the end of 2023.”
These cuts will be in addition to the production adjustments decided at the 33rd OPEC and non-OPEC Ministerial Meeting held in October 2022.
The price of OPEC basket of thirteen crudes stood at $77.53 a barrel on March 30, according to the Cartel. Analysts predict that the new production cuts could boost oil prices by $10 a barrel or more. Prices spiked between 5%-8% Monday morning on the news.
Commenting on the OPEC news, the International Energy Agency (IEA) release the following statement: “The significant new cuts in oil production announced by OPEC+ countries come during a period of heightened uncertainty for global oil markets and concerns about the outlook for the world economy.
“Forecasts by the IEA and other relevant institutions, representing consumers and producers alike, all indicate that global oil markets were already set to tighten in the second half of 2023, with the potential for a substantial supply deficit to emerge. The new OPEC+ cuts risk exacerbating those strains and pushing up oil prices at a time when strong inflationary pressures are hurting vulnerable consumers around the world, especially in emerging and developing economies.”
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