Several OPEC+ countries, including Saudi Arabia and Russia, have started voluntarily reducing oil production by an additional 2.2 million barrels per day in January. This measure will be in effect for the first quarter of 2024, after which the alliance may gradually reintroduce the reduced quantities to the market, depending on market conditions.
Following the OPEC+ meeting held on November 30th, the alliance countries agreed on additional voluntary oil production cuts to achieve balance in the market. Therefore, Saudi Arabia will reduce its production by one million barrels per day until the end of March 2024, and Russia will work on increasing the reduction of oil supplies to the global markets from 300,000 barrels per day to 500,000 barrels per day.
In addition, several other OPEC+ countries will reduce production by approximately 700,000 barrels as follows: Iraq – by 223,000 barrels per day, the United Arab Emirates – by 163,000 barrels per day, Kuwait – by 135,000 barrels per day, Kazakhstan – by 82,000 barrels per day, Algeria – 51,000 barrels per day, and Oman – 42,000 barrels per day according to the Russian news agency, TASS.
These reductions are not included in the OPEC+ agreement and are voluntary, considering that Saudi Arabia has extended its production cut since July 2023 without increasing it, and that Russia is adding an additional 200,000 barrels per day to the reduced supply volumes. Therefore, the new market reduction sizes will be 896,000 barrels per day.
In addition to the new reductions, several OPEC+ countries will also continue to voluntarily adhere to their production cuts until the end of 2024, totaling 1.66 million barrels per day. This measure will take effect from May 2023. Under these commitments, Saudi Arabia will voluntarily reduce production by 500,000 barrels per day, Russia also by 500,000 barrels per day, Iraq by 211,000 barrels per day, the UAE by 144,000 barrels per day, Kuwait by 128,000 barrels per day, Kazakhstan by 78,000 barrels per day, Algeria by 48,000 barrels per day, Oman by 40,000 barrels per day, and Gabon by 8,000 barrels per day. Therefore, the total volume of voluntary oil production cuts by OPEC+ countries until the end of the first quarter of 2024 will be 3.86 million barrels per day.
At the same time, starting from 2024, as part of the OPEC+ deal itself, the implementation of revised oil production quotas will begin. For example, Russia’s allowed production level has been reduced from 10.478 million barrels per day to 9.949 million barrels per day, Azerbaijan’s from 684 thousand barrels per day to 551 thousand barrels per day, and for the UAE, on the contrary, the share has been increased from 3.019 million barrels per day to 3.219 million barrels per day.
According to Tass calculations, OPEC+ countries’ oil production quotas will be reduced by 1.321 million barrels per day, to 40.535 million barrels per day, starting from 2024.
