OPEC+ agreed to keep the current production of oil unchanged.

Story Highlights
  • The 23-nation OPEC has, for the first time, implemented a 2 million barrel-a-day reduction in production agreed at their last meeting in October. This cut is not yet reflected in prices as markets have been undergoing severe price fluctuations across the oil spectrum.

Uncertainty over Chinese demand and Russian supply continues to roil the oil market, but OPEC+ has agreed to maintain production levels at current levels.

This 23-nation group only agreed to a 2 million barrel per day reduction at their last meeting. The full impact of this cut is unclear amid large shifts in oil prices. Prices for Brent crude were at their lowest level in nearly two months before rebounding quickly over the past week.

The volatility in the market is due to two big factors: 1) the European Union’s sanctions on crude imports from OPEC+ member Russia goes into effect next week, and 2) China is tentatively easing its Covid-19 measures that have been eating away at consumption in the world’s most oil-hungry country.

The agreement came after an online gathering, replacing the in-person gathering that OPEC and its allies had been planning at their Vienna headquarters until this week. The virtual meeting lasted about 20 minutes.

OPEC+, which includes the Organization of the Petroleum exporting countries (OPEC) and allies including Russia, made a decision in October which angered the US and other Western nations. They agreed to cut oil production by 2 million barrels per day (about 2%) from November until the end of 2023.

We don’t think Saudi Arabia is really that happy with Russia.

The Organization of Petroleum Exporting Countries argued that it wanted to cut production due to a weaker economic outlook. However, the price of oil has declined since October because of slower economic growth, higher interest rates, and increased market speculation about possible future cuts in production.

Though the group of oil producers decided to leave their policy unchanged today, its key ministers will meet on February 1st for a meeting. The full meeting is scheduled for June 3-4.

JP Morgan said on Friday that OPEC+ might review production in the new year based on fresh data related to Chinese demand and compliance levels with price caps in Russia.

This story was published by a wire agency. The original text of the story has not been modified, and only the headline has been changed.


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