The Organization of the Petroleum Exporting Countries (OPEC) and its partners, known as OPEC+, showed their commitment to higher oil prices in their meeting on June 4, with Saudi Arabia announcing additional output cuts and some other members extending their voluntary cuts until the end of 2024.
Following their meeting in Vienna, OPEC+ members extended their voluntary supply cuts until the end of 2024, which were first announced in April and were supposed to expire at the end of 2023, according to the Saudi Press Agency, the official news agency of the Kingdom.
In addition, the Saudi Arabian Ministry of Energy has announced that beginning in July, the country will implement a further voluntary cut in its crude production, amounting to one million barrels per day (bpd). This additional oil cut can be prolonged beyond July, the news agency reported. As a result, Saudi Arabia’s output will be reduced to 9 million bpd in July, and its total voluntary cut will be 1.5 million bpd.
The decision comes after the OPEC+ crude oil producers announced surprise additional production cuts of about 1.16 million barrels per day (bpd) in April.
The OPEC+ meeting this weekend was one of the most heated in recent years. Tensions are rising between Saudi Arabia and Russia, two of the world’s largest oil producers, over output limits, according to a report from the Wall Street Journal. The report stated that Russia continues to push massive amounts of cheaper oil into the market, undercutting Saudi Arabia’s efforts to raise oil prices.
OPEC+, composed of 23 oil-producing countries, produced about 60 percent of global oil production in 2022.
These production cuts have been a major source of concern for the Biden administration, since they may eventually harm U.S. consumers by increasing inflationary pressures, particularly at the gas pump.
Oil prices spiked to over $80 per barrel in April after a surprise decision by OPEC+ to cut production, but have since reversed course, plunging to around $70 per barrel.
According to media reports, Saudi Arabia, OPEC’s de facto leader, has pressed for tighter oil supply during the last meeting in order to raise oil prices. It has requested that smaller African producers lower their quotas, which has been met with opposition from African countries.
According to the IMF’s most recent economic predictions, Saudi Arabia requires oil prices of $80.90 per barrel to balance its budget this year.
Following the meeting, Russian Deputy Prime Minister Alexander Novak told the Rossiya-24 TV channel that Russia is honoring its commitments to reduce oil output and that there are no disagreements with Saudi Arabia.
“The result of the discussions was the extension of the deal until the end of 2024,” Novak said, per Reuters.
The next OPEC+ meeting will be held on Nov. 26 in Vienna, according to an OPEC statement.
From The Epoch Times