Opec Members Agree To Maintain Output Policy

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Opec Members Agree To Maintain Output Policy

Opec+ Members Agree To Maintain Output Policy

Oil prices are very close to the $90 threshold, and it seems that the oil-producing countries are happy with that. That's why, in a recent OPEC+ meeting, the members decided to maintain the current output policy.

An unchanged oil supply policy is a sign that OPEC+ remains committed to supporting oil prices via supply cuts. Additionally, OPEC+ also pressed some members to improve their compliance with the output cuts.

After the announcement, oil prices turned higher and touched a 5-month high. Given that no significant effort has been made in terms of economic recovery in China, the only thing supporting the oil prices is OPEC and OPEC+.

So far this year, oil has staged an impressive rally, given that we are only 4 months in so far! It seems that the raised geopolitical tensions in Russia are also putting the oil prices higher.

According to one expert, OPEC+ has decided to keep the supply cuts intact for the first 6 months of 2024. This will allow them to maintain a tight supply and hopefully increase the prices.

Just a month ago, OPEC+ members decided to extend the proposed output cuts till June 2024. As per the details, the OPEC+ members will cut the supply by around 2.2 million. The results of the OPEC+ meeting also hinted at how few members need to adhere to the targets of supply cuts.

Two members, including Kazakhstan and Iraq, also pledged to follow the supply policy and will work to fix the overproduction.

The OPEC+ statement also included details that those countries that are involved with overproduction will also submit plans on how they plan to compensate for the excess.

As per the data from the Platts, the overproduction during January was around 275K bpd, and around 175K bpd in February. This means there's still a lot of work that the OPEC+ needs to do to rein in the oversupply problems.

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