Saudi Arabia’s cabinet on Tuesday welcomed the latest OPEC+ decisions, saying the Kingdom’s decision with seven other countries to extend their voluntary oil cuts aimed to boost precautionary efforts to support oil market stability.
OPEC oil-producing nations plus others including Russia make up OPEC+.
The OPEC+ alliance agreed on Sunday to extend its additional voluntary oil production cuts of 2.2 million barrels per day, initially announced in November 2023, until the end of September 2024.
The alliance also decided to extend the additional cuts of 1.65 million barrels per day, announced in April 2023, until the end of December 2025.
Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman met in person in Riyadh on the sidelines of the 37th OPEC and non-OPEC Ministerial Meeting.
Saudi Energy Minister Prince Abdulaziz bin Salman said that it is better for OPEC+ countries to remain cautious, in the context of the different views on the market and the continuing state of economic uncertainty.
“The group is moving hard and showing its cohesion and that it can stop or reverse course if necessary,” he told reporters after attending the OPEC+ meeting in Riyadh on Sunday.
On his part, Kuwait’s Oil Minister Imad Al-Atiqi affirmed on Tuesday that the economic conditions and interest rates were two main factors in determining market stability and supply and demand rates.
In a ministry press release, Al-Atiqi said that the OPEC and OPEC+ ministerial meetings that were held on Sunday came as part of OPEC+ efforts to help stabilize the oil market.
Al-Atiqi applauded the positive results of those meetings that would help restore balance in the oil market, in which they included the extension of voluntary output cuts until December 2025.
He called for being cautious during the revision of the oil market developments, pointing out that OPEC+ strategy towards the market will depend mainly on the pattern of those developments.
He stressed that the commitment of the OPEC+ member states in the voluntary reduction in an integrated manner is vital, as it will ensure market stability and interacting proactively with the dynamics of global oil demand.
Al-Atiqi praised Iraq, Russia, and Kazakhstan’s pledge to achieve full compliance with OPEC+ production targets and to submit their updated compensation plans to the OPEC Secretariat by the end of June 2024.
These plans address excess production levels since January 2024.
HSBC stated that the recent OPEC+ agreement has successfully maintained the cohesion of the alliance.
The bank kept its Brent crude price forecast unchanged at $82 per barrel for 2024, expecting it to average $80 per barrel in the second half of the year.
HSBC analysts noted that the outcome of the OPEC+ meeting was anticipated, as they had previously forecasted the continuation of production cuts until at least the end of 2025, given strong supply growth from non-OPEC sources.
Overall, HSBC indicated that OPEC+ plans to add approximately 2.5 million barrels per day to production from October 2024 to September 2025.
This includes the end of the second phase of voluntary cuts agreed upon in November 2023, amounting to about 2.2 million barrels per day, along with an additional 300,000 barrels per day from the UAE.
