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Oil prices began to retreat on Thursday afternoon as it became clear that OPEC+ members were agreeing to voluntary cuts beginning in the new year, and that those cuts would be announced only by each member country instead of by the group as a whole.
OPEC+ announced during the full OPEC+ meeting on Thursday that because all the cuts agreed to today were voluntary, they would be announced not by the group, but by the individual member states. Immediately following the meeting’s kickoff, it was also announced that Brazil would join the OPEC+ group effective in January.
Three weeks ago, OPEC’s Secretary General HE Haitham al-Ghais said that the group’s door was open should Brazil wish to join. Brazil has a goal of substantially increasing its crude oil production to become the world’s fourth-largest producer by 2030.
In September, Brazil exported $3.92 billion in crude oil, while importing $681 million, according to OEC data. This level of exports is a 13% increase year over year, with China as the primary destination.
Brent crude oil prices, which had been trading up around 1.5% during the JMMC meeting, sank to +0.16% on the day in the absence of an announced production strategy from the group’s leadership. WTI slipped into the red with a loss of 3.43% on the day following the full meeting.
The specifics of what was agreed to for the first quarter of 2024 among the OPEC+ members:
• Algeria agreed to cut oil production by another 51,000 bpd
• Kazakhstan agreed to reduce oil output by an additional 82,000 bpd
• Saudi Arabia agreed to extend its 1 million bpd output cut
• Russia’s Deputy Prime Minister Alexander Novak said that it would deepen voluntary oil export cuts by 300,000 bpd, and said it would roll over the existing 500,000 bpd vountary production cuts
• Oman will cut another 42,000 bpd
• Iraq will voluntarily cut 211,000 bpd
• Kuwait will cut 135,000 bpd
• The UAE will cut 163,000 bpd
Angola not only didn’t announce an additional voluntary cut, but it publicly rejected its current quota, and reiterated its proposal for a 1.18 million barrel quota beginning in January. It added that it will not stick to the new OPEC quota.
Not including cut extensions from Saudi Arabia and Russia, the additional voluntary cuts beginning in January and carrying through to the end of March is 684,000 bpd. All together, the total voluntary cuts for the first quarter is 2.184 million bpd.
The next OPEC+ meeting is scheduled for June 1, 2024.
