OPEC+ Slashed its Q1 2024 Oil Supply by an Extra 2.2 Million Barrels/Day
OPEC+ Oil Supply Cuts
Several OPEC+ counties on Thursday, agreed to slash supply by a total of 2.2 million barrels per day for the first quarter of 2024. Standing out is Saudi Arabia, which will rollover its 1 million bpd cuts and Russia that will curb supply by 500,000 bpd [1]. These measures go on top of the previously agreed output reduction program of 3.66 million bdp, scheduled to last until the end of the next year. These brings the total tally for Q1 2024 to nearly 5.9 million bpd. [2]
According to the November Oil Report, the International Energy Agency (IEA) projects world oil demand of almost 103 million bpd in 2024, and the total OPEC+ curbs would account for more than 5% of that. However, the agency expects demand growth to slow compared to the current year and had warned that the oil market "could shift into surplus at the start of 2024". [3]
The deep cuts of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, have failed to support oil prices recently. After October's 2023 peak, USOil posted two straight losing months, shedding more than 15%. It also dropped on Thursday, after the new cuts announcement.
The new curbs for Q1 2024 are voluntary by specific countries and not formal OPEC+ plan, amidst disagreements around the quotas. These led to the postponement of the meetings, which were originally scheduled to take place over the last weekend. Markets appear unconvinced for now, as OPEC+ supply has shown an increase in recent months. The output reduction program is rather deep, but compliance is key, while non-OPEC producers pump more and IEA expects them to continue to lead global growth next year.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 01 Dec 2023 https://www.opec.org/opec_web/en/press_room/7267.htm | |
| Retrieved 01 Dec 2023 https://www.opec.org/opec_web/en/press_room/7160.htm | |
| Retrieved 07 May 2024 https://www.iea.org/reports/oil-market-report-november-2023 |
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