Opec To Continue With Output Cuts

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Opec To Continue With Output Cuts

Opec+ To Continue With Output Cuts, According To UBS

According to analysts at the UBS, the OPEC+ members will likely agree to continue with the production cuts and even extend them.

The next meeting of the OPEC+ is scheduled during the first week of June & thus has the potential to shake the oil markets. UBS believes that the voluntary production cuts of crude oil continue as OPEC+ wants to maintain a balance in the oil market.

The meeting of the OPEC+ is on 1st June, during which the members will evaluate the oil output cuts and discuss whether any further action is required.

2.2 Billion Bpd Worth Of Production Cuts

The OPEC+ members are already cutting the output voluntarily by around 2.2 billion bpd for the 1H2024. The move was heralded by Saudi Arabia which announced an early production cut.

The new production cuts extend the earlier reductions that started in late 2022. As a result, production has been cut by around 5.86 million barrels per day, equivalent to almost 6% of the global demand for crude oil daily.

UBS analysts added that despite all the work, the decline in oil inventories is not what it used to be! Additionally, the higher rates also dent economic activity, which means the OPEC+ will need to take a more precautionary and proactive role.

That's why it is safe to say that the production cuts will likely be extended by the OPEC+ for a minimum of 3 months. So if these decisions are made at the June meeting, it means the production cuts will continue till August.

For now, the UBS has maintained a mostly positive outlook for the crude oil market. The reason for this outlook is healthy demand due to the summer season and the OPEC+ production cuts. Together, these two factors will keep the balance in the oil markets and help to maintain the prices.

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