The Impact of OPEC+ Voluntary Cuts on the Oil Market

The cuts could reach about 1.5 mb/d

Summary

Some OPEC+ members led by Saudi Arabia announced today a series of “voluntary” oil output cuts that will go into effect in May and remain in place until the end of 2023.  

Saudi Arabia will implement a voluntary cut of 500,000 barrels per day (b/d) in coordination with some other OPEC and non-OPEC members, the Saudi Press Agency (SPA) reported.

The UAE, in its turn, announced that it will voluntarily slash output by 144,000 b/d starting in May, while Iraq said it will reduce production by 211,000 b/d.

“For the purpose of taking precautionary measures to confront the challenges facing global oil markets, and in order to achieve the balance between demand and supply and market stability, the ministry of oil decided to reduce the voluntary production by 211,000 b/d,” Iraq said according to an Arabic press statement released by the ministry of oil.

Kuwait, meanwhile, said it will implement a voluntary cut of 128,000 b/d, while Algeria will reduce its own output by 48,000 b/d, according to local media reports. Oman will also cut its production by 40,000 b/d, Energy Intelligence reported. As for Kazakhstan, its ministry of energy said it will implement a voluntary cut of 78,000 b/d, while Gabon will reduce output by 8,000 b/d, Reuters reported. All countries will implement voluntary cuts during the same period (May -December).

Russia’s Deputy Prime Minister Alexander Novak also said today that Moscow will extend its previously announced 500,000 b/d oil production cut until the end of 2023, according to Reuters.

Commentary

Why Did OPEC+ Members Cut Output?