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OPEC+ slashes output, Brazil to join in 2024

VIENNA: Saudi Arabia on Thursday announced it would extend its voluntary oil production cut of one million barrels per day "until the end of the first quarter of 2024", according to a statement. Riyadh has implemented the cut since July, bearing the brunt of the production cuts in a bid to support prices. Russia said on Thursday it would deepen its voluntary oil production cut to 500,000 barrels per day and extend it until the end of the first quarter of 2024. The extra cuts are intended to "maintain stability and balance in the oil market," Deputy Prime Minister Alexander Novak said in a statement following a meeting of OPEC+ ministers.

Meanwhile, major producer Brazil will join OPEC+ from next year, the oil cartel announced on Thursday. Brazil is among the world’s top 10 producers and has been the largest oil producer in Latin America since 2016. Its crude production hit a record 3.7 million barrels per day in September, a near 17 percent increase from the same month last year and a 6.1 percent hike from August, according to pricing agency Argus Media.

Ministers of the 13-member Organization of the Petroleum Exporting Countries (OPEC) headed by Saudi Arabia and its 10 partners led by Russia has met to discuss further output cuts to boost prices. “The meeting welcomed Alexandre Silveira de Oliveira, Minister of Mines and Energy of the Federative Republic of Brazil, which will join the OPEC+... starting January 2024,” OPEC said in a press release.

OPEC+ was born in late 2016 when Russia and nine others joined forces with the Saudi-led OPEC to prop up falling prices. “Considering that Brazil is a large oil producer and is driving oil production growth it is important to have them on board, but it seems that they are not cutting production like Mexico, so would conclude with: Good for OPEC+, less relevant for oil market balances,” UBS analyst Giovanni Staunovo said.

The 23-member OPEC+ is a motley crew of countries: Saudi Arabia and Iran are bitter rivals, South Sudan and Libya have been wracked by civil wars and others such as Venezuela are mired in economic crises. The cartel faced its biggest crisis in 2020 as countries locked down due to the COVID pandemic, sending oil demand plunging. The group agreed in April 2020 to slash output by 9.7 million barrels per day in order to boost sagging prices. It began to raise production again in 2021 as the market improved.

In the most recent meetings amid plunging prices, OPEC+ members have announced voluntary cuts to boost prices. Since the end of 2022, the alliance has implemented supply cuts of about five million barrels per day (bpd) with Saudi Arabia taking the lead. Amid stuttering global economic growth, analysts had largely expected OPEC+ producers to extend or deepen production cuts into next year to halt the recent slump in prices. Intense negotiations have continued in recent days as Saudi Arabia, which has borne the brunt of the cuts, sought to convince African countries to chip in by accepting lower production quotas. Angola and Nigeria were among those countries reluctant to sign up, seeking to step up production to secure foreign currency. – AFP

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