OPEC+ Reviews Oil Production Targets

By John Lee.

On Thursday, Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman held a virtual meeting on the sidelines of the 38th OPEC and non-OPEC Ministerial Meeting (ONOMM).

Objective:

• Reinforce precautionary efforts.
• Support stability and balance in the global oil markets.

Key Decisions:

1. Extension of April 2023 Adjustments:
   • Adjustment Volume: 1.65 million barrels per day.
   • Extension Period: Until the end of December 2026.
2. Extension of November 2023 Adjustments:
   • Adjustment Volume: 2.2 million barrels per day.
   • Extension Period: Until the end of March 2025.
   • Gradual Phase-out Plan:
     • Monthly reductions starting April 2025.
     • Full phase-out by September 2026.
     • Flexibility to pause or reverse reductions based on market conditions.
3. Compensation for Overproduction:
   • Pledges by Overproducing Countries:
     • Achieve full compliance with production quotas.
     • Submit updated compensation schedules for overproduced volumes (since January 2024) to the OPEC Secretariat by December 2024.
   • Compensation Period: Extended until the end of June 2026.

Significance:

• Reinforces the role of OPEC+ in maintaining market stability.
• Demonstrates transparency and collaboration among member nations.
• Allows flexibility in response to changing market conditions.

Full statement from OPEC:

OPEC plus countries Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, which previously announced additional voluntary adjustments in April 2023 and November 2023 held a virtual meeting on the sideline of the 38th  OPEC and non-OPEC Ministerial Meeting (ONOMM).

The meeting was conducted to reinforce the precautionary efforts of OPEC+ countries, aiming to support the stability and balance of oil markets. The aforementioned countries decided, in addition to the latest decisions from the 38th ONOMM, to extend the additional voluntary adjustments of 1.65 million barrels per day that were announced in April 2023, until the end of December 2026.

Moreover, these countries will extend their additional voluntary adjustments of 2.2 million barrels per day, that were announced in November 2023, until the end of  March 2025 and then the 2.2 million barrels per day adjustments will be gradually phased out on a monthly basis until the end of September 2026 to support market stability as per the attached table. This monthly increase can be paused or reversed subject to market conditions.

In the spirit of transparency and collaboration, the meeting welcomed the pledges made by the overproducing countries to achieve full conformity and resubmit their updated compensation schedule to the OPEC Secretariat for the overproduced volumes since Jan 2024 before the end of December 2024 as agreed in the 52nd Meeting of the Joint Ministerial Monitoring Committee (JMMC).  The compensation period will be extended until the end of June 2026.

(Source: OPEC)