In their meeting on June 4, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, demonstrated their commitment to higher oil prices, with Saudi Arabia proposing more output cuts and several other members extending their voluntary cutbacks until the end of 2024.
Following their conference in Vienna, OPEC+ members extended voluntary production cutbacks announced in April until the end of 2024, which were due to expire at the end of 2023, according to the Saudi Press Agency, the Kingdom's official news agency.
Furthermore, the Saudi Ministry of Energy has declared that the nation will execute a further voluntary drop in oil output of one million barrels per day (bpd) beginning in July. According to the news agency, this further oil cut might be extended beyond July. As a consequence, Saudi Arabia's output will be decreased to 9 million barrels per day in July, with a total voluntary drop of 1.5 million barrels per day.
The decision comes after OPEC+ crude oil producers unexpectedly reduced output by 1.16 million barrels per day (bpd) in April.
This weekend's OPEC+ conference was one of the most contentious in recent years. According to the Wall Street Journal, tensions are increasing between Saudi Arabia and Russia, two of the world's top oil producers, over output caps. According to the research, Russia continues to flood the market with cheap oil, undermining Saudi Arabia's efforts to boost oil prices.
In 2022, OPEC+, a group of 23 oil-producing countries, contributed over 60% of world oil output.
These production cuts have been a key cause of concern for the Biden administration, since they have the potential to affect US consumers by raising inflationary pressures, notably at the petrol pump.
Oil prices rose to more than $80 per barrel in April following a surprise decision by OPEC+ to curb output, but have subsequently dropped to roughly $70 per barrel.
According to media sources, Saudi Arabia, OPEC's de facto leader, pushed for tighter oil supplies at the most recent meeting in order to hike oil prices. Smaller African manufacturers have been asked to reduce their quotas, which has been greeted with pushback from African governments.
According to the IMF's most recent economic forecasts, Saudi Arabia needs oil prices of $80.90 per barrel this year to balance its budget.
Following the meeting, Russian Deputy Prime Minister Alexander Novak told the Rossiya-24 TV station that Russia is adhering to its obligations to limit oil output and that no problems exist with Saudi Arabia.
"The result of the discussions was the extension of the deal until the end of 2024," Novak added, according to Reuters.
According to an OPEC announcement, the next OPEC+ meeting will be place on November 26 in Vienna.
