Major oil-producing nations, Saudi Arabia and Russia, have announced additional production cuts in an effort to stabilize volatile oil prices following a meeting of the OPEC+ alliance. Brazil has also been declared as joining the group from next year, marking a significant development. Brazil’s Energy Minister Alexandre Silveira called it a “historic moment,” but mentioned that the invitation to join the group needed further detailed study by his ministry.
Extended Production Cuts and New Additions to OPEC+
In the virtual meeting of ministers from the 23-member OPEC+ alliance, Riyadh revealed its decision to prolong its voluntary oil production cut of one million barrels per day until March 2024. Moscow, on the other hand, announced a substantial increase in its oil export reduction, from 300,000 barrels a day to 500,000 barrels a day until March. Other OPEC+ member countries, including the UAE, Kuwait, Kazakhstan, Algeria, and Oman, are also set to implement production cuts, as reported by Bloomberg.
Global Economic Concerns and Price Movements
Amid concerns over global economic growth, analysts widely anticipated OPEC+ producers to either extend or deepen production cuts into the next year to counter the recent decline in prices. Despite the announcements, the price of Brent, the European crude benchmark, fell by 0.31% to $82.84 per barrel, while WTI, its American equivalent, dropped by 2.47% to $75.94 around 1730 GMT.
Negotiations and Ongoing Challenges
Intensive negotiations took place in recent days, with Saudi Arabia working to convince African countries to accept lower production quotas and contribute to the supply cuts. However, countries like Angola and Nigeria were hesitant, seeking to increase production to secure essential foreign currency, having agreed in June to reduce their quotas.
OPEC Welcomes Brazil
In a positive development for the OPEC+ alliance, Brazil is set to join from the next year. As one of the world’s top 10 oil producers and the largest in Latin America since 2016, Brazil’s inclusion is expected to strengthen the grouping.
Challenges Ahead and Market Reactions
Investors have cautioned that production cuts alone may not be sufficient to prevent further price declines, highlighting ongoing challenges in the oil market.
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