As part of a deal among oil producers to raise prices in the wake of economic uncertainty, Moscow, Riyadh, and several other OPEC+ members agreed on Sunday extensions to the oil production restrictions that were first announced in 2023.
The decision to prolong the restrictions until mid-2024 follows earlier reductions in oil exports and output as some of the biggest energy producers in the world attempt to raise market prices.
Russia announced reductions of 471,000 barrels per day (bpd) in Q2, while Saudi Arabia’s oil ministry indicated it would reduce production by one million barrels per day (bpd) from April to June (Q2). “In order to maintain market stability, these additional cuts will be gradually restored depending on market conditions,” after the end of the second quarter, said Russia’s Deputy Prime Minister Alexander Novak. In addition, a 500,000 bpd cut announced in April 2023 and valid through the end of 2024 is supplemented by the measures for both countries. Following suit, the UAE, Kuwait, Iraq, and Kazakhstan declared they will prolong the current voluntary reduction through the end of June.
Since the end of 2022, the 22-nation OPEC+ oil coalition has slashed supplies by more than five million barrels per day (bpd).
Russia’s invasion of Ukraine in 2022 sent oil prices soaring to $140, raising earnings across the industry. Due to sanctions imposed because of the Kremlin’s offensive in Ukraine, the West has attempted to target Moscow’s energy exports, prompting Russia to increase supplies to nations like China and India.
Friday saw a spike in oil prices as a result of the extended extension. While the North Sea Brent Crude Barrel achieved a month-high of $83.55, the US West Texas Intermediate (WTI) traded above $80 for the first time since November.
