OPEC Plus agreement drives oil prices up as production cuts extended

Economy

Published: 2024-03-04 12:06

Last Updated: 2024-04-16 06:34


Oil field
Oil field

Oil prices rose on Monday following an agreement by the member countries of the OPEC Plus group to extend voluntary production cuts by 2.2 million barrels per day in the second quarter of the current year, which aligns closely with market expectations.

Brent crude futures rose by 28 cents or 0.3 percent to USD 83.83 per barrel, while West Texas Intermediate crude futures increased by 20 cents or 0.3 percent to USD 80.17 per barrel, according to Bloomberg. 

Yesterday, Sunday, Saudi Arabia decided to continue its oil production cut by one million barrels per day until the end of June 2024, maintaining its strategy aimed at supporting oil prices.

A reliable source at the Saudi Ministry of Energy mentioned that the Kingdom will extend its voluntary reduction of one million barrels per day, which began in July 2023, into the second quarter of the current year.

The source added: "Subsequently, and in support of market stability, these additional reduction volumes will gradually be returned, according to market conditions."

This additional voluntary cut comes to reinforce the precautionary efforts made by the OPEC Plus countries to support the stability and balance of petroleum markets, referring to the oil bloc consisting of 23 countries led by Russia.

The decision comes shortly after Moscow also announced on Sunday a reduction of its oil production by about 500,000 barrels per day by the end of the second quarter of 2024, as reported by the Saudi Press Agency. 

Thus, Saudi Arabia's production will reach around nine million barrels per day, which is less than the Kingdom's production capacity of 12 million barrels per day.