KUWAIT: The decision of the OPEC+ group on reducing oil output by two million barrels per day until the end of 2024 aims to enhance the stability and balance of oil markets, said two Kuwaiti oil analysts on Monday. Kuwait announced Sunday that it will continue its voluntary oil output reduction by 128,000 bpd until the end of 2024. This voluntary cut comes as a precautionary measure taken in coordination with the countries partaking in the OPEC+ deal on the decrease announced last April, Kuwait’s Minister of Oil Manaf Al-Hajri, added in a statement issued by the Ministry of Oil.
In separate statements for KUNA, analysts said that this decision shows OPEC+ group’s commitment towards the cooperation deal signed on December 10, 2016, and its keenness on stabilizing the oil markets. Kuwaiti oil expert Dr Abdulsamie Behbehani said that this OPEC + decision is expected for two main reasons. The first being the increase in production from outside the OPEC + countries, which amounted to about 1.9 million barrels per day. The increase came mostly from the United States, Canada, Brazil and Guinea due to the increase in exploration and production.
The second reason is the increase in commercial stocks in some consuming countries by 60 percent, as a result of the previous winter, as it was not as harsh as expected, which reduced the consumption of commercial and even strategic stocks,” he said. Behbehani noted that OPEC+ reduction was expected, as increase of production from outside of the group led to imbalance in the oil market, which was exploited by stockbrokers that led to sharp fluctuations in prices. “Saudi Arabia’s decision to reduce its production by an additional one million barrels per day next July is in the interest of global markets and supports its stability,” Behbehani added.
Oil analyst Ahmad Karam said that oil prices are still fluctuating at low prices at around $70 per barrel despite the latest voluntary oil production cut from OPEC+ countries. He said the low prices directly affect oil-producing countries that rely on oil income. The voluntary oil reduction has not helped so far, as oil prices have stabilized at their current level. He added that yesterday’s decision to extend production cuts until the end of 2024 supports the stability of oil prices at the required levels. He said oil prices will remain the same at the present time, until the effect of the additional voluntary reduction by Saudi Arabia begins next month, expecting an increase in oil prices in the coming months of July and August, especially with the travel season and summer.
He explained that current price levels are a result of fears and low economic factors, pointing out that there are expectations of a decrease in economic growth rates for industrial countries, especially China, United States and EU countries. Kuwait lauds OPEC decision Al-Hajri, also Chairman of the Board of Directors of Kuwait Petroleum Corporation, headed Kuwait’s delegation to the 186th OPEC ministerial meeting held Saturday and the 35th OPEC and non-OPEC producing countries held in Vienna earlier in the day.
Kuwait is committed to the cutting decisions, in addition to its voluntary reduction by 128,000 bpd, to produce 2,548,000 bpd as of June, Al-Hajri said. The deal on cutting output was extended to the end of 2024 as a precautionary measure taken in coordination with the countries participating in the OPEC+ agreement, which had previously announced in April 2023 on voluntary cuts, that includes Kuwait, Saudi Arabia, the UAE, Iraq and Oman.
The minister emphasized Kuwait’s support for the OPEC+ efforts, which aimed at enhancing stability and balance of markets and thanked Saudi Arabia for its initiative on a voluntary cut of one million bpd in July. He further lauded the positive atmospheres which prevailed during meetings that reflected the one-team spirit. There is a consensus on reaching mechanisms of reviewing production figures of all member states to be a base of calculating the output level in 2025, he said. He stated that this ensures transparency, stability and sustainability of the markets. – KUNA