OPEC+ Continues Oil Production Cuts into June
In a recent decision, OPEC+ member nations have agreed to prolong their voluntary reductions in crude oil output throughout the second quarter. This strategic move is a key component of the group's ongoing efforts to maintain oil price stability by curbing supply.
OPEC+ member nations have agreed to extend their voluntary cuts to crude oil production through the second quarter, the group announced Sunday. This decision is part of their ongoing efforts to stabilize oil prices by reducing the supply.
OPEC+ is a coalition of the world's top oil-producing countries that had previously announced voluntary oil cuts of 2.2 million barrels per day in November. The recent extension still includes significant cuts, with Saudi Arabia leading by cutting 1 million barrels per day. However, Russia and Iraq will now cut 471,000 and 220,000 barrels, respectively, slightly less than their initial announcements of 500,000 and 223,000 barrels.
The voluntary barrel-per-day production cuts for certain countries are unchanged, according to OPEC+. The United Emirates will cut by 163,000 barrels, Kuwait by 135,000, Kazakhstan by 82,000, Algeria by 51,000, and Oman by 42,000.
Since November, the price of Brent crude, the global benchmark, has increased by almost $2 per barrel, reaching $83.46. When production cuts lead to higher barrel prices, it can also result in an increase in retail gas prices at the pump.
Drivers in the United States have been facing higher prices per gallon recently, especially with the approaching spring break travel season. Despite this, experts believe that a significant increase in crude oil prices is not likely. This is mainly due to the strong oil production in the United States, which has helped in keeping oil prices stable. In fact, OPEC+ has even decided to increase its cuts to maintain the balance in the market.
Goldman Sachs revised its forecast for the average oil price for this year, reducing it by 12%. This adjustment was made because of the high level of oil drilling activities in the United States, which is expected to prevent Brent from hitting the initial projection of $92 a barrel. Instead, analysts at the bank are now anticipating that Brent will average at $81 a barrel in 2024.
Last month, the Energy Information Administration shared updates on oil refinery inputs, crude oil stock, and gasoline production. Following this announcement, oil prices dropped as it was revealed that US commercial crude oil inventory had reached 447.2 million barrels. Additionally, the EIA mentioned that gasoline production was steady at an average of 9.4 million barrels per day.
Editor's P/S:
The decision by OPEC+ to extend its voluntary production cuts is a positive step towards stabilizing oil prices in the global market. The cuts, led by Saudi Arabia, aim to reduce the supply of crude oil and support prices. This is good news for oil-producing countries, as it provides them with a stable income stream. However, it could also lead to higher retail gas prices for consumers, especially as we approach the spring break travel season.
Despite the potential for higher gas prices, experts believe that a significant increase in crude oil prices is unlikely. This is due to the strong oil production in the United States, which has helped to keep prices stable. Additionally, Goldman Sachs has revised its forecast for the average oil price for this year, reducing it by 12% due to the high level of oil drilling activities in the United States. This suggests that the market is likely to remain balanced, with prices remaining relatively stable in the coming months.
