OPEC+ announced a surprise cut of over 1 million barrel per day crude oil production cut on Sunday ahead of the scheduled JMMC Monday. This is in addition to the already announced 500kppd previously announced by Russia. Saudi energy official says that this is a precautionary measure aimed at supporting the stability of the oil market. More member states are expected to announce their voluntary cut today. The oil production cut is the biggest from OPEC+ since they agreed on a 2 million barrel per day crude oil production cut at the October meeting. Oil prices had run up at the end of last week after again bouncing off $64 closing along with copper in a bullish hammer as KnovaWave commented Friday.
- Saudi Arabia will implement a voluntary cut of 500 thousand barrels per day from May till the end of 2023 in coordination with some other OPEC and non-OPEC Participating Countries in the Declaration of Cooperation.
- The UAE will implement a voluntary cut of 144k from May until the end of 2023
- The Sultanate of Oman will voluntarily cut 40,000 barrels per day of crude oil from May 2023 until the end of 2023, in coordination with some of the countries participating in the OPEC Plus agreement.
- Iraq will voluntarily cut 211k barrels per day of crude oil
- Kuwait will voluntarily cut 128k barrels per day of crude oil
- Kazakhstan will voluntarily cut 78k barrels per day of crude oil
- Algeria will voluntarily cut 48k barrels per day of crude oil
- Gabon will voluntarily cut 8k barrels per day of crude oil production
This action takes a significant amount of oil off the market. The move comes after the US President Biden having sold the US SPR down to lows not seen since 1980. Very clearly this is a political afront to the US. The move comes around six months after President Biden visited Saudi Arabia in a bid to repair relations between the world’s biggest oil consumer and its biggest crude-oil exporter.
Energy Markets Close Friday Ahead of the Surprise Cut:
The decision could undermine a plan by the Group of Seven to cap the price of Russian oil on the global market. The OPEC+ production cut will limit Russia’s loss of market share, it represented an unprecedented effort by the world’s biggest oil producers to collectively help Russia with the political and economic problems caused by the war in Ukraine.
Source: OPEC, TC
From The TradersCommunity News Desk