OPEC+ oil alliance commence fresh oil production cuts

By Habeeb Adamu

The Organisation of Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+, proclaimed voluntary cuts to their production of crude oil about 1.15 million barrels per day(bpd), prescribed as a “precautionary measure” aimed at market stability.

In a new report, members of the 23-oil nation cartel had been expected to adhere to the agreement of two million bpd cuts when their ministerial panel, which included Saudi Arabia and Russia, met virtually on Monday.

The OPEC+, which comprises Organisation of the Petroleum Exporting Countries and 10 allies led by the Russian government, agreed on output cuts of two million bpd from November, which was opposed by the U.S,amid tighter supply boosts in oil prices.

Reacting to the report, the U.S had argued that the world needed lower prices to support economic growth and prevent Vladimir Putin, Russian President from earning more revenues to fund the Ukraine war.

According to official statements, Riyadh said it would cut output by 500,000 bpd, while Iraq would reduce its production by 211,000 bpd.

The United Arab Emirates also noted that it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd, Oman’s cut would be 40,000 bpd while Algeria’s 48,000 bpd and Kazakhstan would also cut output by 78,000 bpd.

Also speaking, Russia’s deputy prime minister said Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023.

After Russia’s unilateral reductions, US officials said its alliance with other OPEC+ members were weakening, but Sunday’s move showed the cooperation was still strong.

In addition, oil prices fell to 15-month low last month in response to the banking crisis that followed the collapse of two US lenders and resulted in Credit Suisse being rescued by Switzerland’s biggest bank UBS.