At their latest online meeting, oil producers in the OPEC+ group have agreed a package of 2.2 million barrels per day (bpd) in voluntary production cuts for the first quarter of next year.
The cuts include a rollover of the 1.3 million bpd in voluntary cuts by Russia and Saudi Arabia, which had been due to expire at the end of this year. A further 900,000 bpd in cuts were pledged by six other countries, including a 220,000 bpd cut by Iraq, and a 163,000 bpd cut by the UAE. It is also looking likely Brazil will join the OPEC+ group next year, although it seems less likely that it will cut its oil production.
Speaking to the news agency Agence France-Presse, Giovanni Staunovo, an analyst at UBS, said:
“Considering that Brazil is a large oil producer and is driving oil production growth, it is important to have them on board, but it seems that they are not cutting production like Mexico, so [I] would conclude with: good for OPEC+, less relevant for oil market balances.”
Nevertheless, producers like ExxonMobil and Chevron, the makers of the Mobil and Texaco lubricant and coolant products, are continuing to increase production in the US and places like Guyana. This and other factors led the Brent Crude benchmark to drop by about 2% to under $80 per barrel by the end of the following day.
The International Monetary Fund has estimated that Saudi Arabia needs a price of $86 per barrel to fund its ambitious economic transformation.
