The OPEC+ alliance confirmed this Monday, after holding a teleconference of its internal JMMC committee, that, starting in May, it will withdraw 1.66 million barrels per day (mbd) from the market through “voluntary” cuts by several of its partners.
In a statement, the Organization of the Petroleum Exporting Countries (OPEC) alludes to paths and unexpected decisions communicated by several countries already on Sundayabout new limitations on the oil supply that have strongly boosted the price of crude oil.
These reductions, which total 1.16 mbd, are added to a reduction of 0.5 mbd previously announced by Russia, which yesterday also warned that it will extend it until the end of the year.
In October 2022, the group of 23 countries that make up the organization agreed to a strong cut of 2 mbd.
“The total additional voluntary production adjustments (…) will amount to 1.66 mbd,” says the OPEC note.
It specifies that the new cut is shared between Saudi Arabia and Russia, which will reduce their pumping by 500,000 barrels per day each, Iraq (211,000 bd), the United Arab Emirates (144,000 bd), Kuwait (128,000 bd), Kazakhstan (78,000 bd), Algeria (48,000 bd), Oman (40,000 bd), and Gabon (8,000 bd).
All these “voluntary” reductions, that is, without a binding and consensual agreement within the alliancewill be in force from May until the end of 2023.
The JMMC surveillance committee, an internal and advisory body of OPEC+, “took note that this is a precautionary measure intended to support the stability of the oil market,” the statement highlights.
The decision of this group, which controls close to 40% of the world supply of crude, surprised some markets where analysts had said they did not expect OPEC+ to change its supply levels at this time.
Among major consumers, the news has fueled fears of new inflationary pressures.
“We believe that these cuts are not recommended at this time given the uncertainty of the market and we have made it clear“A spokesperson for the White House Security Council told EFE yesterday.
Oil prices skyrocketed this morning, with a barrel of Brent crude, the main international reference, close to 84 dollars, after posting a 5.2% rise at 10:44 GMT.
The Kremlin came out today to defend the “important measure” that, among other things, would have the objective of guaranteeing investments in the sector.
The cuts serve to “maintain world prices for oil and petroleum products at the appropriate level,” Dmitir Peskov, a spokesman for the Russian presidency, said in Moscow.
For his part, the European Commissioner for the Internal Market, Thierry Breton, warned that the OPEC+ decision makes it clear that the oil market “is an artificial market” and advocated abandoning fossil sources as soon as possible.
“After this decision, It is urgent, truly urgent, to stop being dependent on fossil fuels because those who control themor at least they control a larger part, they play with it,” Breton said in an interview with the France Info radio station.
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