OPEC+ agrees to keep oil production unchanged
- The 23-nation group has only just implemented the hefty 2 million barrel-a-day reduction agreed at its last gathering in October, and the full impact of that cut is unclear amid severe gyrations in prices
At a meeting on Sunday, the OPEC+ alliance has agreed to maintain production at current levels, pausing to take stock of a global oil market that’s roiled by uncertainty over Chinese demand and Russian supply.
The 23-nation group has only just implemented the hefty 2 million barrel-a-day reduction agreed at its last gathering in October, and the full impact of that cut is unclear amid severe gyrations in prices. After hitting the lowest level since September on 28 November, Brent crude ended up posting its biggest weekly gain in a month.
The volatility has been driven by European Union sanctions on crude exports from OPEC+ member Russia, which come into effect on Monday. At the same time, China is tentatively easing the Covid-19 measures that have eroded consumption in the world’s biggest oil importer.
The agreement came after an online gathering of the Organization of Petroleum Exporting Countries and its allies, which replaced the in-person gathering at its Vienna headquarters that had been planned until this week. Sunday’s virtual meeting took about 20 minutes.
OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, angered the US and other Western nations in October when it agreed to cut output by 2 million barrels per day (bpd), about 2% of world demand, from November until the end of 2023.
Washington accused the group and one of its leaders, Saudi Arabia, of siding with Russia despite Moscow's war in Ukraine.
OPEC+ argued it had cut output because of a weaker economic outlook. Oil prices have declined since October due to slower Chinese and global growth and higher interest rates, prompting market speculation the group could cut output again.
But today the group of oil producers decided to keep the policy unchanged. Its key ministers will next meet on 1 February for a monitoring committee while a full meeting is scheduled for June 3-4.
JP Morgan said on Friday that OPEC+ could review production in the new year based on fresh data on Chinese demand trends and consumer compliance with price caps on Russia crude output and tanker flow.
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