We asked this question last month: Who cuts first: OPEC+ or Fed?
… and more than two weeks later, we finally have an answer:
In the latest in a long series of slaps on Biden’s face, on Sunday OPEC+ unexpectedly announced an oil production reduction of over 1 million barrels per day, limiting output from May. Saudi Arabia spearheaded the cartel’s efforts by committing to a 500,000-barrel reduction of its own production.
According to the Saudi Press Agency, a Ministry of Energy official stated the Kingdom of Saudi Arabia will “implement a voluntary cut of 500 thousand barrels per day from May till the end of 2023.”
The cut will be in coordination with other OPEC and non-OPEC participating countries in the declaration of cooperation, the state-run media outlet continued.
“This voluntary cut is in addition to the reduction in production agreed at the 33rd OPEC and non-OPEC Ministerial Meeting on October 5, 2022,” the paper pointed out.
Other members, such as Kuwait, the United Arab Emirates, and Algeria, also joined in the reduction efforts.
Previously, Russia had pledged to cut its crude-only output by 500,000 barrels per day in March in response to Western sanctions, including price caps on its oil and petroleum production, and to keep those curbs in place through June, but has now extended its pledged cuts through the end of the year
Here are the reductions per country:
- *SAUDI ARABIA TO CUT OIL OUTPUT BY 500,000 BARRELS/DAY FROM MAY
- *KUWAIT TO VOLUNTARY CUT OIL PRODUCTION BY 128,000 BARRELS/DAY
- *UAE TO REDUCE OIL PRODUCTION BY 144,000 BARRELS/DAY FROM MAY
- *KAZAKHSTAN TO CONTRIBUTE 78K B/D TO OPEC+ OUTPUT CUT: MINISTRY
- *IRAQ TO CUT 211,000 B/D OF OIL OUTPUT FROM MAY: MINISTRY
- *ALGERIA TO CUT 48K B/D OF OIL OUTPUT FROM MAY TO END 2023: APS
- *OMAN TO CONTRIBUTE 40K B/D TO OPEC+ PRODUCTION CUT: DELEGATE
Russia commented on the announcement of production cuts:
“Today the global oil market is going through a period of high volatility and unpredictability due to the ongoing banking crisis in the US and Europe, global economic uncertainty, and unpredictable and short-sighted energy policy decisions.
Saudis said:
“Ministry of Energy official emphasized that this is a precautionary measure aimed at supporting the stability of the oil market,” SPA reports
Brent futures are expected to rise this evening in response to today’s news. Prices have been range bound between $86-$73 a barrel for much of 2023.
And cue the “disappointment” press release from The White House.
