The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, on Thursday announced further production cuts for next year to bolster oil prices that have recently tumbled amid a weakening economic backdrop.
Following a virtual meeting of OPEC+ oil ministers, OPEC said in a statement on Thursday night that its Secretariat "noted the announcement" of several OPEC+ countries to additionally cut a total of 2.2 million barrels per day (bpd) for the first quarter (Q1) of 2024, which aims to support "the stability and balance of oil markets."
The reductions will be taken from the quotas adopted at the last OPEC+ ministerial meeting in June. It will add to the voluntary output cuts announced by OPEC+ countries in April and will last until the end of 2024, the OPEC statement read.
In breakdown, Saudi Arabia, the de facto leader of OPEC, will extend its voluntary production cut of 1 million bpd, which has been in effect since July, to the end of Q1 2024. Russia, a leading OPEC ally, will cut its oil exports by 500,000 bpd, up from the current 300,000 bpd, until next March.
Other OPEC+ countries, including Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, have pledged smaller cuts for Q1 2024, the OPEC said.
However, the statement noted that the new output cuts will be "returned gradually subject to market conditions" to "support market stability" after March next year.
Oil prices have slid since October amid concerns about oversupply in a weakening global economic outlook. The international benchmark Brent crude has stayed in the range of low- to mid-80 U.S. dollars a barrel in recent weeks, from this year's peak of over 90 dollars a barrel in September.
Before Thursday's OPEC+ ministerial meeting, analysts had expected the oil-producer group to make bigger production cuts next year to support the oil prices.
Crude prices failed to rally after the meeting, with Brent crude edging down 0.32 percent to settle at 82.83 dollars a barrel on Thursday.
Thursday's meeting also saw Brazil, one of the world's top 10 crude producers, ready to join OPEC+ next year. Brazil's Minister of Mines and Energy Alexandre Silveira de Oliveira attended the online meeting.
OPEC+ countries are set to convene their next ministerial meeting on June 1, 2024.