The 22 members of the OPEC+ oil cartel have agreed this Sunday extend crude oil production cuts until the end of 2025 to support prices in a context of economic and political uncertainty. …
OPEC, the historic cartel of producers that includes Venezuela, and its partners, adopted a supply reduction strategy at the end of 2022 to try to prop up prices.
The oil countries had planned to hold the mid-year meeting according to tradition, at the cartel’s headquarters in Vienna, but ultimately adopted a hybrid format.
The appointment began around 12:00 p.m. and the announcement came shortly after. The joint reduction in production agreed represents about two million barrels per day (mbd). But if the voluntary pumping cuts adopted by some members are added, the total of crude oil that stops coming to the market is close to six million barrels per day.
Saudi Arabia, Russia, Algeria, Oman, Kazakhstan, Kuwait and Iraq have also implemented additional efforts this year to reduce their production and will maintain this policy in 2025, according to a document published by OPEC+.
Quotas, a source of discord between countries
The modification of quotas is cause of contention in the alliance and provokes heated debates and has even led countries to abandon the cartel. At this meeting, the members agreed to the United Arab Emirates a increase in production of nearly 300,000 bpd.
Mukesh Sahdev, an analyst at Rystad Energy, indicated that OPEC+ faces “an important challenge,” as he pointed out that the number of barrels reaching the market is probably “more than recorded,” which puts the OPEC’s strategy at risk. sign.
Iraq and Kazakhstan exceeded their quotas in the first quarter and Russia, which is under sanctions over the war in Ukraine, reported overproduction in April.
Crude oil prices have seen little lasting change since the group’s last meeting six months ago and are hovering around 80 dollars. OPEC has maintained its forecasts for crude oil demand for 2024, but the International Energy Agency (IEA) revised its projections downward.
In its meetings in the middle and end of the year, this cartel seeks consensus in a group of very diverse countries that includes Saudi Arabia, which is the world’s largest exporter of crude oil, and other members such as Venezuela, which faces US sanctions against its sector. energetic.
In this context, agreement is not always possible and Angola announced in December that it was withdrawing from the carteljust when Brazil announced it joined OPEC+ as an observer.
