by Maha El Dahan and Ahmed Rasheed
DUBAI (Reuters) – Saudi Arabia, Russia and other oil producers united in OPEC+ announced further production cuts on Sunday, for a total volume of around 1.16 million barrels per day ( bpd), a surprise decision intended to maintain the stability of the oil market.
The move comes on the eve of a virtual ministerial meeting of the organization, which was expected to stick with its reduction target of 2 million bpd until the end of the year.
Crude prices fell last month to around $70 a barrel, their lowest level in fifteen months, on oil demand concerns linked to turmoil in the banking sector.
Several sources did not think, however, that OPEC + would commit to a further reduction in supply, especially since the price of a barrel has risen to around 80 dollars.
The latest announcements to date could cause a rise of 10 dollars in the price of a barrel, estimated Sunday the director of the investment company Pickering Energy Partners.
They bring the total volume of the OPEC+ production cut to 3.66 million bpd, according to Reuters calculations, or 3.7% of global demand.
“OPEC is taking preventive measures to deal with any possible drop in demand,” said Amrita Sen, founder and director of the analysis firm Energy Aspects, on Sunday.
OPEC+ agreed last October on a 2 million bpd drop in production, the largest drop since the COVID-19 pandemic, valid from November 2022 to the end of 2023, despite pressure from the United States for an increase in supply.
The additional pumping cuts will come into effect next month.
Saudi Arabia will cut production by an additional 500,000 bpd, Iraq by 211,000 bpd, United Arab Emirates by 144,000 bpd, Kuwait by 128,000 bpd, Kazakhstan by 78,000 bpd, Oman by 40,000 bpd, Algeria by 48,000 bpd .
Russia announced, through its Deputy Prime Minister Alexander Novak, the extension until the end of the year of a reduction of 500,000 bpd in its production, implemented unilaterally last February after the introduction of Western sanctions aimed at capping the price of its oil.
( Jean-Stéphane Brosse)
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