Environment

Oil kingpin Saudi Arabia extends its production cut into first quarter as OPEC+ holds policy

The logo of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, on Thursday, July 6, 2023.
Bloomberg | Bloomberg | Getty Images

The influential Organization of the Petroleum Exporting Countries coalition and its allies, collectively known as OPEC+, on Thursday opted against formally deepening production cuts, while de-facto leader Saudi Arabia extended its 1 million-barrel-per-day voluntary trim into the first quarter, and other members announced further reductions.

The policy steps were decided in a virtual meeting delayed by internal disagreements over the baselines — the levels off which quotas are decided — of the OPEC group’s largest west African members, Nigeria and Angola. The spat postponed talks initially scheduled to be held in person in Vienna over the weekend of Nov. 25-26. The baselines of Angola, Nigeria and Congo remain under study.

The OPEC+ alliance had already instituted a 2 million-barrels-per-day cut in place until the end of 2024, with several coalition members voluntarily pledging a further 1.66 million-barrels-per-day decline over that same period.

While OPEC+ has not formally endorsed production reductions, market participants are following the possibility of further voluntary reductions announced by key participants to the coalition. Already, Saudi state media has announced that Riyadh will extend its voluntary cut of 1 million barrels per day, which it has had in place since July, until the end of the first quarter of 2024.

Russian deputy minister Alexander Novak, who represents his country in OPEC+ affairs, has said that Moscow will implement a voluntary supply cut totaling 300,000 barrels per day of crude and 200,000 barrels per day of petroleum products over that same period, according to a Google-translated statement on Telegram.

Close Saudi ally, Kuwait will enforce a 135,000 barrel per-day cut in the first quarter, while the energy ministry of OPEC member Algeria said it would trim a further 51,000 barrels per day. Oman said it will also reduce output by 42,000 barrels per day in that same period.

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