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VIENNA: The Organisation of the Petroleum Exporting Countries (OPEC)+ committee on Friday suggested not to change the cartel’s output strategy despite Saudi Arabia and Russia extending their cuts amid recovering prices, reported AFP.
Oil prices have seen an uptick in recent months because of high demand along with tighter supply, sending the price for Brent crude up to $85/barrel — the highest level it has been in over three months.
After Russia’s invasion of Ukraine in February 2022, oil hit $130 dollars per barrel.
In a virtual meeting on Friday, the group’s Joint Ministerial Monitoring Committee (JMMC) “reaffirmed the commitment of its member countries” to the production reduction strategy “which extends to the end of 2024”, a press release said.
The JMMC also expressed its “appreciation for the kingdom (of Saudi Arabia)’s additional voluntary cut of one million barrels per day (bpd)”, which the country had extended until September on Thursday in an effort to prop up prices.
In addition to Riyadh’s cut that took effect in July, a further cut of 300,000bpd for September was announced by Russian deputy prime minister Alexander Novak.
For the month of August, Moscow had pledged to cut production by 500,000bpd.
In June, the 13 members of OPEC headed by Riyadh and their 10 allies led by Moscow agreed to reduce output in 2024.
Recently, signs have emerged that supply cuts are starting to have the desired effect despite concerns about the health of the global economy.
However, Saudi Arabia is expected to “gradually withdraw the voluntary cut over the coming months” and return to the agreed production level of 10 million bpd to avoid “considerable revenue shortfalls… and dampening economic growth,” said Commerzbank analyst Carsten Fritsch.
The next JMMC meeting is set for October 4, according to a statement from the group.
The group’s next ministerial meeting is scheduled for November 26.
The JMMC has no decision-making power but discusses market conditions and makes recommendations, which are then formally discussed and decided at the organisation’s ministerial meetings.
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