Oil prices fell in early trading on Friday, extending losses that began after producers in the OPEC+ alliance agreed to voluntarily cut crude oil production in the first quarter of next year by less than market expectations.
February Brent crude futures fell 0.4% to $80.5 a barrel as of 7:34 GMT, while U.S. West Texas Intermediate crude futures also fell 0.3% to $75.7 a barrel.
Saudi Arabia, Russia and OPEC+ members, which account for more than 40% of global oil production, agreed to voluntarily cut production by more than 2 million barrels per day in the first quarter of 2024.
However, at least 1.3 million barrels per day of the cuts come from extending voluntary production cuts already implemented by Saudi Arabia and Russia.
Delegates earlier said discussions were ongoing on new additional production cuts of up to 2 million barrels per day.
It reflects production from OPEC+ – made up of the Organization of the Petroleum Exporting Countries (OPEC)OPEC) while allies including Russia – which produces about 43 million barrels per day – have cut production by about 5 million barrels per day in an effort to support prices and achieve market stability.
OPEC said in a statement after the meeting that the eight oil-producing countries would reduce production by a total of 2.2 million barrels per day.
The figure includes extensions of 1.3 million barrels per day of voluntary production cuts by Saudi Arabia and Russia.
According to Reuters, the additional production cuts of 900,000 barrels per day committed yesterday (Thursday) were divided by 200,000 barrels per day in fuel exports from Russia and six member countries.
The United Arab Emirates said it had agreed to cut production by 163,000 barrels per day, and Iraq announced that it would cut production by an additional 220,000 barrels per day in the first quarter.
Algeria said it planned to voluntarily reduce production by 51,000 barrels per day in the first quarter of 2024, while Kuwait announced a voluntary production reduction of 135,000 barrels per day for three months starting from January 1 next year.
Oil-producing countries including Saudi Arabia, Russia, the United Arab Emirates, Iraq, Kuwait, Kazakhstan and Algeria have said production cuts will be phased out after the first quarter if market conditions allow.
OPEC+ is focusing on production cuts amid falling oil prices, which reached $98 in late September, and growing concerns about weak economic growth and oversupply expectations in 2024.
I expect international energy agency This month, demand growth slowed in 2024 as “the final stages of the post-Covid-19 pandemic economic recovery dissipated and gains from energy efficiency, electric vehicle fleet expansion and structural factors consolidated.”
OPEC+ invited Brazil to become a member of the organization, and Brazil’s energy minister expressed his hope to join in January next year.
Brazil is one of the world’s 10 largest oil producers and has been Latin America’s largest oil producer since 2016.
According to the “Argus Media” agency, Brazilian crude oil production reached a record high of 3.7 million barrels per day in September last year, an increase of about 17% over the same month last year and an increase of 6.1% over August 2023.
UBS analyst Giovanni Stornovo said, “Because Brazil is a big oil producer and leads the growth in crude oil production, it is important to participate, but they do not seem to be cutting production as much as Mexico, so there will eventually be Good for Brazil.” According to AFP, OPEC+’s importance to the oil market has decreased. ”
The OPEC+ alliance, formed in late 2016 when Russia and nine other countries joined OPEC to support falling oil prices, has relied on production cuts of about 5 million barrels a day since late 2022.