The OPEC alliance decided this Thursday that oil supply levels will be adjusted next year with “voluntary” cuts by most of its partners, such as those extended by Riyadh and Moscow until March 31, 2024.
That is the result of the teleconference held today by the Ministers of Energy and Petroleum of the 23 member countries of the group, a meeting initially called for last Sunday in Vienna and which was later postponed, apparently due to internal disagreements, according to EFE.
The fact that the meeting ended without the usual press conference and only with a brief written statement without any mention of an additional and binding reduction in output, seems to have disappointed the markets, where prices reversed the upward trend of recent days.
The ministers reaffirmed “the permanent commitment” of OPEC to “guarantee a stable and balanced oil market,” reads the final statement released by the Vienna secretariat of the Organization of the Petroleum Exporting Countries (OPEC).
In addition, they confirmed that the cuts adopted in previous meetings remain in force, for a total of 3.66 million barrels per day (mbd).
For 2024, moderate readjustments of the quotas of Angola, Nigeria and Congo are expected, although still subject to a study by independent specialized entities, they added.
After the meeting, several countries separately announced plans to reduce their production in the first quarter of 2024.
Thus, as expected, Saudi Arabia will extend its additional and voluntary cut of one million barrels per day (mbd), which it has been applying since July and leaves its quota at 9 mbd.
At the same time, Russia will increase the reduction on its oil exports from 300,000 to 500,000.
Iraq promised to withdraw 211,000 bd, the United Arab Emirates 163,000 bd, Kuwait 135,000, Kazakhstan 82,000, Algeria 51,000 and Oman 42,000 bd.
According to Kuwaiti Oil Minister Saad al Barrak, quoted by the Kuwaiti KUNA agency, “these additional reduction amounts will be restored (from April) gradually, in accordance with market conditions.”
The unusual form of today’s agreement has aroused skepticism in markets where an additional and binding cut of at least one million barrels per day (mbd) was expected.
While this expectation led to a marked rise in the price of a barrel of crude oil on Monday to levels not seen in the last three weeks, the downward trend returned after the unclear result of the meeting was known.
At 18:00 GMT, Brent, the benchmark oil in Europe, fell to $82.9 per barrel, 0.2% less than at yesterday’s close, while West Texas Intermediate (WTI), the benchmark in the US, fell to $82.9 per barrel. In the US, it fell 1.5% to $76.7 per barrel.
Today’s surprise was the announcement that Brazil will join OPEC in January 2024 and that its Minister of Mines and Energy, Alexandre Silveira, participated as a guest at the telematic conference, which coincided with the opening of the climate summit. COP28 in Dubai.
“The meeting welcomed H.E. Alexandre Silveira de Oliveira, Minister of Mines and Energy of the Federative Republic of Brazil, who will join the OPEC Cooperation Charter as of January 2024,” OPEC indicates in its statement.
The aforementioned ‘Letter of Cooperation’ is the founding document of the OPEC alliance, signed in 2016.
Brazil, which is currently the largest Latin American oil producer, will become the 24th partner and the third in the region, along with Mexico and Venezuela.