Moscow, Riyadh, and several other OPEC+ members extended oil production limits that were first announced in 2023 as part of a deal with oil producers to increase prices in the wake of economic turmoil.
The agreement to extend cuts until mid-2024 builds on past curbs to oil output and exports as some of the world’s leading energy producers seek to raise market rates. Saudi Arabia’s oil ministry said it would cut production by one million barrels per day (bpd) from April to June (Q2), while Russia announced cutbacks of 471,000 bpd in Q2.
“In order to maintain market stability, these additional cuts will be gradually restored depending on market conditions,” after the end of the second quarter, said Russia’s Deputy Prime Minister Alexander Novak.
The measures for both countries are in addition to the 500,000 bpd cut announced in April 2023 and are valid until the end of 2024. UAE, Kuwait, Iraq, and Kazakhstan followed suit, announcing that they would prolong current voluntary cuts until the end of June. Since the end of 2022, the OPEC+ oil partnership of 22 nations has implemented supply cutbacks totaling more than five million barrels per day (bpd).
Russia’s 2022 offensive in Ukraine pushed oil prices over $140, boosting profitability across the business. The West has attempted to target Moscow’s energy exports as part of sanctions implemented in response to the Kremlin’s onslaught on Ukraine, prompting Russia to increase supplies to countries such as China and India.
Oil prices surged last Friday in anticipation of the new extension. The US West Texas Intermediate (WTI) rose above $80 for the first time since November, while the North Sea Brent Crude Barrel reached a month-high of $83.55.
In 2016, the 13-member crude oil-producing OPEC coalition, led by Riyadh, founded OPEC+ with an extra 10 countries, including Moscow, to lower prices in response to US competition.
