OPEC+, made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia, will extend voluntary production cuts until the second quarter, the official Saudi Press Agency said on Sunday.
Analysts said the move was widely expected and indicates that producers are in no rush to restore lost volume to the market amid uncertainty over the demand outlook.
The Saudi Press Agency, quoting a source in the Ministry of Energy, said that Saudi Arabia will extend the voluntary production cut of one million barrels per day, which was implemented in July 2023, until the end of the second quarter, in coordination with some countries participating in OPEC +.
This reduction of one million barrels per day comes in addition to a reduction of 500 thousand barrels per day previously announced by the Kingdom of Saudi Arabia and will continue until the end of this year.
The announcement “doesn't come as a surprise. However, the decision sends a message of cohesion and confirms that the group is in no rush to bring back supply volumes, supporting the view that when it finally happens, it will be gradual (we expect in the third quarter, as demand increases seasonally). Giacomo Romeo, an analyst at Jefferies, said in a note.
An extension beyond the second quarter remains highly uncertain, Romeo said, and will put the focus on the next meeting of OPEC+ officials in early June.
The decision extends the cuts implemented by OPEC+ in late November. Oil prices have since risen, but remain well below the 2023 highs hit in the fall. Even the conflict between Israel and Hamas, and the threat that it could spread to threaten oil supplies from the Middle East, failed to push crude oil to those high levels.
The price of crude oil rose last week, with May Brent crude trading at BRN00,
Bank24,
It ended Friday at $83.55 a barrel on the ICE Futures Europe exchange. Brent crude, the global benchmark, has risen 8.5% so far in 2024 but remains more than 13% below the 52-week high recorded on September 26 at $96.55 a barrel. West Texas Intermediate crude oil for May CL00,
American standard CL.1,
All 24,
The price of a barrel of oil ended Friday at $79.97 on the New York Mercantile Exchange, up 11.6% for the year so far, leaving it 14.6% below its 52-week high of $93.68 set on Sept. 27.
