OPEC, Allies Begin Fresh Oil Production Cuts May

The Organisation of Petroleum Exporting Countries and its allies, referred to as OPEC+, on Sunday, announced voluntary cuts to their production of crude oil, amounting to about 1.15 million barrels per day, calling it a “precautionary measure” aimed at market stability.

Members of the 23-nation oil cartel had been expected to stick to their already agreed two million bpd cuts when their ministerial panel, which include Saudi Arabia and Russia, meets virtually on Monday, Aljazeera reported.

In October, OPEC+, which comprises the Organisation of the Petroleum Exporting Countries and 10 allies led by Russia, agreed on output cuts of two million bpd from November, angering Washington because tighter supply boosts oil prices.

The United States had argued that the world needed lower prices to support economic growth and prevent Russian President, Vladimir Putin, from earning more revenues to fund the Ukraine war.

Sunday’s unexpected voluntary cuts, which should start from May, come in addition to the ones already agreed in October.

Riyadh said it would cut output by 500,000 bpd, while Iraq would reduce its production by 211,000 bpd, according to official statements.

The United Arab Emirates said it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd while Oman’s cut would be 40,000 bpd and Algeria’s 48,000 bpd. Kazakhstan would also cut output by 78,000 bpd.

Russia’s deputy prime minister said Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023.

Moscow announced those cuts unilaterally in February after the introduction of Western price caps.

After Russia’s unilateral reductions, US officials said its alliance with other OPEC+ members was weakening, but Sunday’s move showed the cooperation was still strong.

Oil prices fell to 15-month low last month in response to the banking crisis that followed the collapse of two US lenders and resulted in Credit Suisse being rescued by Switzerland’s biggest bank UBS.