After postponing the decision due to disagreement, several OPEC+ members announced Thursday new oil production cuts for 2024, with one objective: to halt the recent fall in prices.
Once again, the efforts are mainly supported by the two pillars of the alliance of black gold exporting countries, Saudi Arabia and Russia.
Following a meeting of the group’s ministers, Riyadh announced the extension of its reduction measure of one million barrels per day (bpd) until “the end of the first quarter of 2024”.
Moscow will reduce its daily exports of crude oil and petroleum products by 500,000 barrels over the same period.
Among the 23 members, other countries, such as the United Arab Emirates, Iraq, Kuwait, Kazakhstan, Algeria and Oman, will also make smaller reductions, the alliance said in a press release. .
The markets reacted with disappointment to the lack of a collective agreement from OPEC+, with the American WTI temporarily falling by 3%.
“This is a bitter victory for the Saudis, who were only able to convince seven members,” said Jorge Leon, analyst at Rystad Energy.
African reluctance
Initially scheduled for Sunday in Vienna, the meeting was postponed amid discord.
Saudi Arabia, wishing to share the burden, has indeed encountered reluctance from African countries.
Among the holdouts, Angola and Nigeria wanted to “increase their quotas” in order to increase their oil windfall, a source of precious foreign currencies, according to a source close to the discussions.
These two countries did not digest the conclusions of the June meeting, which noted a drop in their production objectives, after years of underinvestment.
The disputes have not been completely resolved, with Luanda rejecting its new production volume allocated by the group, Bloomberg reported.
Not the expected effects
After the sharp cuts of the pandemic, the alliance reopened the floodgates in January 2021 before tightening them again at the end of 2022 against a backdrop of economic uncertainty.
It currently keeps around 5 million barrels per day underground, playing on the scarcity of supply to try to raise prices.
In total, the additional reductions announced this Thursday amount to nearly 900,000 barrels per day.
But this strategy is struggling to bear fruit.
Both crude benchmarks have fallen in recent weeks, while remaining above the average of the last five years.
Prices are now moving around the symbolic bar of US$80 per barrel, after a short-lived surge in Brent to almost $100 at the end of September and far from the $140 reached following the Russian invasion of Ukraine.
Demand appears fragile, between concerns about the economy of China, the world’s leading importer of crude oil, whose post-COVID-19 recovery is proving much more sluggish than expected, and mixed signals coming from Europe and the UNITED STATES.
Brazil invited
On the supply side, crude oil production in the United States and Brazil has reached record levels, causing a shift in the balance of power.
OPEC+, which accounts for around half of global production, “no longer has the control over the market that it once had”, underlines Neil Wilson, analyst at Finalto.
The alliance, born in 2016 in reaction to the challenges posed by American competition, however hopes to be joined by Brazil from January 2024.
“This is a historic moment for Brazil, which opens a new chapter in dialogue and international cooperation on energy,” greeted the Minister of Mines and Energy, Alexandre Silveira, present at the meeting.
But his ministry tempered this announcement, specifying in a press release sent to AFP that it was “analyzing the question”.