To prevent redundant global crude oil supplies, the Organisation of the Petroleum Exporting Countries (OPEC) and its partners may decide as early as March 2024 to cut oil outputs further for Q2 2024. Bloomberg reported seven coalition members committed to cutting supply by 900,000 barrels daily, with Saudi Arabia implementing a one million barrel reduction.
Possible OPEC+ global oil supply cuts on the table for Q2 2024
The seven members are Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman. Officials, who wished to remain anonymous, indicated that additional limits will be considered in March. With a tempered oil price of around $80 per barrel, the surge in US shale production, and the Red Sea conflict endangering shipments, OPEC+ members find it difficult to cover spending.
Reportedly, Prince Abdulaziz bin Salman Al Saud, Saudi Arabia’s energy minister, said in December 2023 that these supply limits may extend past March 2024 should conditions remain the same or worsen.
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Echoing this stance on Thursday, Algeria indicated that it is ready for continued supply reductions and will implement the necessary measures according to market conditions.
Should OPEC+ decide to revivify supply quotas, the International Energy Agency indicated that the global market will again sit with surplus supplies – not just for the next quarter, but also likely for the rest of the year.
At the OPEC+ meeting on Thursday, 1 February 2024, no changes were made to limits already in place. The next meeting of the OPEC+ Joint Ministerial Monitoring Committee will take place on 3 April 2024, but the anonymous sources indicated to Bloomberg that relevant members will meet early in March to reassess the situation.
