Following a meeting of the cartel to further reduce output, authorities on Thursday revealed that Brazil, a major oil producer, has been asked to join OPEC+ starting next year.
Since 2016, Brazil has been the biggest oil producer in Latin America and is ranked among the top 10 producers worldwide.
According to pricing agency Argus Media, its crude production reached a record 3.7 million barrels per day in September, up over 17 percent from the same month the previous year and up 6.1 percent from August.
Brazil will “join the OPEC+… starting January 2024,” the Organization of the Petroleum Exporting Countries (OPEC) announced after a ministerial meeting in Vienna.
Brazil’s Energy Minister Alexandre Silveira, who attended the meeting, called it a “historic moment for Brazil”, but added his ministry still needed to study “in detail” the invitation to join.
“We hope to join this group and work with all 23 countries over the coming months and years,” he said.
The 13-member OPEC headed by Saudi Arabia and its 10 partners led by Russia announced fresh production cuts on Thursday to boost prices.
OPEC+ was born in late 2016 when Russia and nine others joined forces with OPEC to prop up falling prices.
“Considering that Brazil is a large oil producer and is driving oil production growth it is important to have them on board,” UBS analyst Giovanni Staunovo said.
But Saxo Bank analyst Ole Hansen noted Brazil’s “ability to increase production in the coming years”.
“Joining a group which is all about production restraint makes no sense at all,” he noted.
The 23 nations that make up OPEC+ are a motley crew: Saudi Arabia and Iran are fierce competitors, civil wars have rocked South Sudan and Libya, and other nations like Venezuela are enmeshed in economic difficulties.
2020 was the cartel’s worst crisis year as a result of countries going into lockdown over the Covid epidemic, which drastically reduced demand for oil.
In an effort to raise declining prices, the group decided in April 2020 to reduce output by 9.7 million barrels per day.
In 2021, as the market improved, it started to increase production once more.
Since last year, OPEC+ members have announced voluntary cuts to again boost falling prices.
