OPEC oil producers announce voluntary oil supply cuts of two million barrels per day

OPEC+ oil producers on Thursday agreed to voluntary output cuts approaching 2 million barrels per day (bpd) for early next year.

Russia said on Thursday it would deepen its voluntary oil supply cut to 500,000 barrels per day (bpd) and extend it until the end of the first quarter of 2024.

The United Arab Emirates also announced that it will voluntarily cut its oil output by 163,000 barrels a day from the start of January to the end of March, state news agency WAM said on Thursday.

Iraq would be cutting oil output by 211,000 bpd, the Iraqi oil ministry announced on Thursday.

Meanwhile, Algeria’s energy minister told Reuters his country had agreed to cut output by 50,000 bpd while Kazakhstan said it would cut an extra 82,000 bpd in the first quarter.

Russia had previously pledged to cut exports by 300,000 bpd until the end of this year.

The extra cuts are intended to “maintain stability and balance in the oil market,” Deputy Prime Minister Alexander Novak said in a statement following a meeting of OPEC+ ministers.

Novak said Russia would cut its crude supply by 300,000 bpd and its refined oil products by 200,000 bpd based on benchmark levels from May and June 2023.

“Thereafter, to maintain market stability, these additional cuts will be gradually returned into the market at a speed dependent on market conditions,” Novak said in a statement issued by the Russian government.

The UAE’s oil production will be 2.912 million bpd from Jan. 1 to end-March, WAM said. After that, the additional cut in volume will be returned gradually, subject to market conditions, it added.

OPEC+ is focused on lower output with prices down from near $98 in late September and concerns brewing over weaker economic growth in 2024 and expectations of a supply surplus.

Saudi Arabia, Russia, Kuwait, Kazakhstan and Algeria were among producers who said cuts will be unwound gradually after the first quarter market conditions permitting.

Along with its OPEC+ oil partners, Russia has been holding back its oil output and exports in a bid to boost global prices.

The International Energy Agency (IEA) this month forecast a slowdown in 2024 demand growth as “the last phase of the pandemic economic rebound dissipates and as advancing energy efficiency gains, expanding electric vehicle fleets and structural factors reassert themselves.”