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According to three sources familiar with discussions within OPEC+, the cartel is preparing to decide whether to extend its oil production cuts until the end of the year, or even until 2025..
- In recent months, OPEC+ has launched a “millefeuille” of various production cuts within the organization with the aim of boosting the price of a barrel.
- Taking into account the reduction of 3.6 million barrels per day agreed in 2022, the “voluntary” reduction in April 2023 and various compensatory reductions, the group has reduced its daily production by a total of 5.754 million barrels.
As these cuts were decided on a pro rata basis, Saudi Arabia and Russia together account for more than 60% of the group’s total effort. The production of the cartel’s minor members (Malaysia, Gabon, Bahrain, Sudan, etc.) has largely been spared.
Despite the drop in supply, the price of Brent crude oil remains below the target of $90 a barrel pursued by most members of the group.
- With the exception of the shadow war between Iran and Israel in April, Brent has hovered around $80 since the beginning of the month.
- And because? Because the markets were betting on two factors: the lack of discipline within OPEC+ and the growing supply of its competitors.
- Indeed, the United States now produces more oil than any other country in history.
- In addition to the large non-OPEC+ producers (Canada, Brazil, Guyana, etc.), other new exporters—particularly Senegal and Niger—also contribute to maintaining pressure on supply..
Thus, at the meeting on Sunday, June 2, OPEC+ members must reach an agreement that allows them to navigate a new market, dominated by other large producers and marked by weaker than expected demand for oil.
