An oil pump in northern Germany – archive
Minor movements were witnessed in oil prices, on Monday, after the OPEC+ alliance extended voluntary production cuts until the end of the second quarter of this year, as was widely expected.
The member states of the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed to extend voluntary production cuts of 2.2 million barrels per day into the second quarter of the year.
This is expected to protect the market, amid global economic concerns and increased production from outside the group, while Russia’s announcement of an additional reduction in exports and production surprised some analysts.
Price movements
By 10:35 GMT, Brent crude futures fell 14 cents to $83.41 per barrel, after rising 2.4 percent last week.
US West Texas Intermediate crude futures fell by 23 cents to $79.74 per barrel after increasing 4.6 percent last week.
Russian Deputy Prime Minister Alexander Novak said on Sunday that Russia will reduce oil production and exports by an additional 471,000 barrels per day in the second quarter of the year, in coordination with some countries in OPEC+.
Victor Katona, chief crude oil analyst at Kpler, pointed out that the market reaction does not necessarily reflect the seriousness of the OPEC+ announcement.
The additional Russian cut is closely linked to a 400,000 barrels per day decline in the country’s refinery operating rate, which is largely due to Ukrainian drone strikes on refining assets across Russia.
Katona believes that “Moscow’s decision to reduce production contradicts its previous pledges when it actually reduced exports and kept oil at home for refining purposes.”
Jorge Leon, senior vice president at Rystad Energy, a consulting company, said that the OPEC+ cuts will lead to a decline in the group’s production to 34.6 million barrels per day in the second quarter, compared to previous expectations that production would exceed 36 million barrels per day in May, with producers abandoning supply cuts. .
He added: “This new move from OPEC+ clearly shows strong unity within the group, something that came into question after the ministerial meeting in November that witnessed Angola’s exit from OPEC.”
He continued: “It also shows a strong determination to defend a minimum price above $80 per barrel in the second quarter.”
Oil prices received support in 2024 from escalating geopolitical tension in light of the continued escalation in Gaza, and Houthi attacks on commercial ships in the Red Sea, although concerns related to economic growth cast their shadows.
On Sunday, the Houthis pledged to continue targeting British ships in the Gulf of Aden after the sinking of the ship “Rubimar”, owned by a British company.
2024-03-04 12:22:30
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