Opec+ members extend voluntary cuts to June

Eight Opec+ members, including heavyweights Saudi Arabia and Russia, today said they would extend their latest voluntary supply cuts by three months, to the end of June.

The move — announced independently by Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman — essentially represents the extension of a decision in November to continue and deepen ongoing supply cuts.

Saudi Arabia said it would keep its 1mn b/d voluntary crude production cut until the end of June — something it first began implementing in July 2023.

Russia vowed a mix of crude production and export cuts totalling 471,000 b/d. For April, it said it would cut crude output by 350,000 b/d and exports by 121,000 b/d. In May, its crude production cut rises to 400,000 b/d, with the cut to exports falling to 71,000 b/d. In June, the cut is entirely to production and equals 471,000 b/d.

Moscow's announcement represents the only real change to the alliance's supply pledges. All its additional cut promises since August 2023 have applied to exports. In the first three months of this year it said it would reduce crude exports by 300,000 b/d and products exports by 200,000 b/d.

The other voluntary production cuts to the end of June comprise 220,000 b/d from Iraq, 163,000 b/d from the UAE, 135,000 b/d from Kuwait, 82,000 b/d from Kazakhstan, 51,000 b/d from Algeria and 42,000 b/d from Oman.

These are calculated from the respective countries' 2024 output targets, which were set in June 2023, and are in addition to a previous round of voluntary cuts announced in April 2023 that all last until the end of this year.

In their statements, members said the voluntary cuts were aimed at "supporting the stability and balance of oil markets" and would be "returned gradually subject to market conditions." These phrases were echoed in a statement from Opec noting the extension.

The cuts have been implemented at a time of production growth from, notably, the US, Brazil and Guyana. The consensus view on demand — from Argus, the IEA, the US EIA and Opec — suggests growing oil demand this year, with Opec itself the most bullish at 2.25mn b/d.

By Aydin Calik