Oil prices fell in early trade – today, Friday – to continue losses that began after producers in the OPEC Plus alliance agreed to voluntarily cut crude output in the first quarter of next year.
Brent crude futures for February were down 0.4% at $80.5 a barrel by 7:34 GMT, while US West Texas Intermediate crude futures were down 0.3% at $75.7.
Saudi Arabia, Russia and other members of the OPEC Plus group – which pump more than 40% of global oil – have agreed to voluntary production cuts of more than two million barrels per day in the first quarter of 2024.
However, at least 1.3 million barrels per day of these cuts come from voluntary cuts already implemented by Saudi Arabia and Russia.
Representatives earlier said new additional cuts of up to two million barrels per day were under discussion.
OPEC Plus production – comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – reflects a cut of about 5 million barrels a day aimed at actually supporting prices and reaching the market by about 43 million barrels a day. Stability.
In a statement after the meeting, OPEC said the cuts totaled 2.2 million barrels per day from eight producers.
The figure includes Saudi and Russian voluntary cuts of 1.3 million barrels per day.
The additional cut of 900,000 barrels per day pledged on Thursday comes from 200,000 barrels per day of fuel exports from Russia and the remaining 6 members, Reuters reported.
The United Arab Emirates said it agreed to cut output by 163,000 barrels per day, while Iraq announced an additional 220,000 barrels per day cut in the first quarter.
Algeria plans to voluntarily cut its oil production by 51,000 barrels per day in the first quarter of 2024, while Kuwait announced it will voluntarily cut oil production by 135,000 barrels per day for 3 months from next January.
Saudi Arabia, Russia, the United Arab Emirates, Iraq, Kuwait, Kazakhstan and Algeria were among producers who said the cuts would be phased out after the first quarter if market conditions allowed.
OPEC Plus’ focus on cutting production comes in light of a slump in prices that hit $98 a barrel at the end of September, as well as growing concerns about weak economic growth in 2024 and expectations of a surplus in supplies.
This month, the International Energy Agency predicted a slowdown in demand growth in 2024, as “the last phase of the economic recovery following the Covid-19 pandemic dissipates and energy efficiency, the expansion of electric vehicles and structural factors combine.”
Member of Brazil
OPEC Plus invited Brazil to become a member of the group, and the Brazilian energy minister said he hoped to join next January.
Brazil is one of the world’s 10 largest oil producers and, as of 2016, the largest producer in Latin America.
Brazil’s crude oil production reached a record level of 3.7 million barrels per day last September, an increase of approximately 17% from the same month last year and a 6.1% increase from August 2023, according to “Argus Media”.
UBS analyst Giovanni Stonovo said, “Brazil is a big oil producer and a leader in crude production growth, so it’s important to get involved, but it doesn’t seem to be cutting production like Mexico, so it’s going to be good. OPEC Plus, and less important for the oil market.” “, according to Agence France-Presse reports.
The OPEC Plus alliance was formed in late 2016, when Russia and nine other countries joined OPEC to support lower oil prices, and from late 2022, the alliance relies on production cuts of about 5 million barrels per day.
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