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Business News/ Markets / Commodities/  OPEC+ sticks with oil production cutbacks for first quarter to prevent surplus amid weak demand
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OPEC+ sticks with oil production cutbacks for first quarter to prevent surplus amid weak demand

OPEC+ pledged roughly 900,000 barrels a day of additional output curbs for the first quarter as global demand growth slows and rival supplies, led by the US, continue to climb.

OPEC+ has pledged roughly 900,000 barrels a day of additional output curbs for the first quarter (REUTERS)Premium
OPEC+ has pledged roughly 900,000 barrels a day of additional output curbs for the first quarter (REUTERS)

OPEC signaled it will stick with oil production cutbacks this quarter, as the group seeks to avert a surplus. A panel of key members led by Saudi Arabia recommended no policy changes at an online review meeting on Thursday, according to delegates who asked not to be identified. 

The Organization of Petroleum Exporting Countries and its partners have pledged roughly 900,000 barrels a day of additional output curbs for the first quarter as global demand growth slows and rival supplies, led by the US, continue to climb. 

OPEC reaffirmed its “readiness to take additional measures at any time," the Joint Ministerial Monitoring Committee said in a statement on the group’s website. The committee is scheduled to meet again on April 3. 

Also Read: Oil prices rise on OPEC meet, US signals on interest rate cuts; Brent at $81/bbl

Saudi Energy Minister Prince Abdulaziz bin Salman has said the current OPEC curbs could “absolutely" be prolonged beyond the first quarter if needed. That decision would need to be made before the next JMMC, one delegate said. The current round of additional production curbs wasn’t formally announced at an OPEC meeting, but came in separate statements from member countries that was later “noted" by the cartel. 

Initial export data suggest the group has made a slow start on its latest cuts, and oil markets remain fragile. Brent crude futures have seen only limited gains this year, holding just above $80 a barrel even as conflict rages in the Middle East and shipping in the Red Sea comes under attack.

Estimates from the International Energy Agency suggest that world oil markets will tip back into surplus next quarter, and remain oversupplied for the rest of the year, if OPEC relaxes the curbs and revives production.

While world oil demand is set to reach a record of around 103 million barrels a day this year, the pace of growth is decelerating, and being met with a vigorous increase in supplies outside the cartel. US output is hitting unprecedented levels thanks to a resurgence in shale drilling, while Guyana and Brazil are also expanding.

OPEC’s biggest member also indicated some doubts over the medium-term outlook this week, with Saudi Aramco abandoning plans to bolster oil production capacity by 1 million barrels a day, or about 8%, by 2027.  

The full 22-nation OPEC alliance is due to meet at its Vienna headquarters on June 1 to discuss output policy for the second half of the year.

 

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Published: 01 Feb 2024, 07:28 PM IST
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