Despite fears of an oil glut in the northern hemisphere, the OPEC+ group has decided to start unwinding the next tranche of voluntary production costs.
Prior to the online meeting, OPEC+ had two rounds of production cuts still in place. These were 2 million barrels per day (bpd) spread across the entire group, and a further 1.65 million bpd in voluntary cuts by eight members. The members involved in the latter decided to add another 137,000 bpd to the oil market from next month. While this is much smaller than previous increases, it signals that OPEC+ is now putting market share before prices. Increased production from operators like ExxonMobil, the maker of Mobil SHC gear oil, have offset the group’s cuts in the past.
A press release published by OPEC stated:
“In view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories, the eight participating countries decided to implement a production adjustment of 137 thousand barrels per day from the 1.65 million barrels per day additional voluntary adjustments announced in April 2023.”
It added that the 1.65 million bpd cut may be gradually reversed partly or fully depending on market conditions. Crude oil prices remained relatively stable despite the news. The sanctions on Iran and Russia are thought to be supporting prices. In addition, the data and analysts indicate that of the eight OPEC+ members involved in the latest increases, only the United Arab Emirates and Saudi Arabia are thought to have spare capacity.
