By Paul Jouvenet, international business consultant. Eurasia Business News, June 2, 2024
Member states of the Organization of the Petroleum Exporting Countries and non-member states (OPEC+) have decided to extend the current oil production quotas for countries participating in the agreement until the end of 2025, according to a press release published after a meeting of the alliance’s ministerial committee.
According to the document, the previous level of total oil production is extended from January 1, 2025 to December 31, 2025. This decision is a continuation of that of March 4, when OPEC+ announced the extension of production cuts of oil until the end of June.
The permitted oil production level for Saudi Arabia and Russia for next year has not changed compared to 2024 and amounts to 10.478 million bpd and 9.949 million bpd, respectively. For the United Arab Emirates (UAE), OPEC+ member states are proposing to increase the production cap from 300,000 bpd to 3.519 million bpd.
On May 31, industry analysts expected that ministers from OPEC+ countries, at a meeting on June 2, were very likely to extend the deal with the current quota level of at least three months and maintain quotas as part of a voluntary production reduction, which Russia and Saudi Arabia have joined.
On April 3, the OPEC+ Monitoring Committee welcomed Russia’s announcement that its voluntary oil production cut in the second quarter of 2024 would be based on production, not exports. The committee did not give recommendations on changing the volume of oil production to the alliance member countries.
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The total permitted oil production level of all OPEC+ countries for 2024 is approximately 39.7 million barrels per day.
The statement does not account for decisions on voluntary oil production reduction levels, which a number of OPEC+ countries, including Russia and Saudi Arabia, have previously taken in addition to official quotas. Today, the total level of voluntary reduction is 2.2 million barrels per day.
OPEC+ ministerial meetings will continue to take place twice a year. The next meeting will take place on December 1, 2024.
The Russian government press service said that participants in the OPEC+ meeting decided to partially gradually restore voluntary production cuts starting in October 2024.
Eight OPEC+ countries, led by Russia and Saudi Arabia, which are voluntarily reducing oil production in excess of their quotas, will extend their cuts of 1.7 million barrels per day, which began in May 2023 and are valid in 2024, for the whole of 2025, according to the Saudi state agency.
In November 2023, OPEC states and their partners agreed to voluntarily extend production cuts of 2.2 million barrels per day for the first quarter of 2024, in order to support oil prices. Meanwhile, Russian Deputy Prime Minister Alexander Novak announced Moscow’s decision to gradually reduce oil production and exports by 471,000 barrels per day in the second quarter of 2024.
Already on December 1, 2023, Russia announced its decision to extend the voluntary reduction in its oil exports and will increase it from 300,000 to 500,000 barrels per day (bpd) until the end of the first quarter of 2024. The decision today extends this reduction until the end of June.
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In January, Kazakhstan and Iran failed to meet their obligations to cut oil production, but promised to improve compliance with quotas and compensate for excess production.
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In 2016, OPEC formed the OPEC+ coalition with 10 non-OPEC oil exporting countries, including Russia, to manage global oil production and prices. The OPEC+ alliance accounts for a significant share of global oil production and has a substantial impact on global oil markets
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