Russia has announced that it will extend its voluntary oil export cuts by 300,000 barrels per day (bpd) until the end of the year. The decision comes as a measure to strengthen the precautionary measures taken by the OPEC+ countries in order to maintain stability and balance in the oil markets, according to Deputy Prime Minister Aleksandr Novak.
Novak also stated that Russia will review its voluntary cuts on a monthly basis to consider the possibility of deepening the reduction or increasing production, depending on the situation in the world market. This additional reduction is in addition to the voluntary cuts previously announced by Russia in April 2023, which will last until the end of December 2024.
The move by Russia follows that of Saudi Arabia, the world’s largest oil producer, which also announced an extension of its voluntary production cut of 1 million bpd until the end of the year. The two countries have been cutting oil output and exports in coordination to support global oil prices.
These voluntary reductions are in addition to the cuts that some OPEC+ members had already declared in April, which were then extended until the end of 2024. The reductions are considered voluntary because they are outside the official policy of OPEC+, which mandates production quotas for every non-exempt member.
OPEC+ is a group comprised of the Organization of the Petroleum Exporting Countries and its allies, including Russia, which collectively pump around 40% of the world’s oil. The group has been cutting output since November 2022 in an effort to stabilize oil prices and reduce excess supply.
The announcement of the extended cuts by Russia and Saudi Arabia caused the price of Brent crude, the international benchmark blend, to jump above $90 per barrel for the first time since November 2022. This increase in price reflects the market’s positive reaction to the news of continued supply reductions.
The extension of the voluntary cuts by these two major oil producers is expected to have a significant impact on global oil markets. With oil prices already experiencing volatility due to various geopolitical and economic factors, the decision to limit supply further is likely to contribute to further price increases in the coming months.
It remains to be seen how the situation in the world market will evolve and whether additional production adjustments will be necessary. The OPEC+ countries, including Russia and Saudi Arabia, are closely monitoring market conditions and are prepared to take further action if needed to maintain stability and balance.
In conclusion, Russia’s announcement to extend its voluntary oil export cuts, along with Saudi Arabia’s decision to continue its production reduction, has fueled a surge in oil prices. These efforts by the two major oil producers are aimed at stabilizing the market and ensuring a balance between supply and demand. The impact of these cuts on global oil markets will be closely monitored in the coming months.