On Friday, Brent crude closed $1.64 higher, representing a 2% increase, at $83.55 per barrel, marking an increase of over 8% thus far this year
OPEC+ members, led by Saudi Arabia and Russia, have agreed to prolong voluntary oil output reductions of 2.2 million barrels per day until the second quarter.
This move aims to provide additional support to the market amidst worries regarding global growth and increasing production levels outside the alliance.
Saudi Arabia, the primary figure in the Organization of the Petroleum Exporting Countries (OPEC), has stated it will continue its voluntary reduction of 1 million barrels per day (bpd) until the end of June, maintaining its output at approximately 9 million bpd.
Meanwhile, Russia, the leader of the OPEC+ coalition, plans to decrease oil production and exports by an additional 471,000 bpd in the second quarter. Russian Deputy Prime Minister Alexander Novak has presented updated data indicating that production cuts will account for a growing percentage of the total reduction.
Geopolitical tensions and attacks on Red Sea shipping have lent support to oil prices in 2024, although worries about economic growth have had a dampening effect.
While it was widely anticipated that OPEC+ would retain the existing cuts, Russia’s confirmation could further strengthen prices.
There was a surprise from Russia, said UBS analyst Giovanni Staunovo.
If the Russian cuts are fully implemented additional barrels would be removed from the market. So that is a surprise move no one expected and could lift prices, he said.
On Friday, Brent crude closed $1.64 higher, representing a 2% increase, at $83.55 per barrel, marking an increase of over 8% thus far this year.
Individual announcements regarding the cuts were made by OPEC+ members on Sunday, with OPEC subsequently releasing a statement affirming the total reduction of 2.2 million bpd. The cuts are expected to be gradually reversed in line with market conditions, as reported by the Saudi state news agency SPA.
