Sources say that OPEC+ agrees on oil production cuts of approximately two million barrels per day

LONDON/MOSCOW/DUBAI (Reuters) – OPEC+ oil producers agreed on Thursday to voluntary production cuts approaching two million barrels per day early next year, led by Saudi Arabia, to extend its current voluntary cut, delegates told Reuters.

Saudi Arabia, Russia and other members of OPEC+, which pump more than 40% of the world’s oil, held a virtual meeting on Thursday to discuss 2024 production amid concerns that the market is facing a potential surplus.

Its production of about 43 million barrels per day already reflects reductions of about five million barrels per day aimed at supporting prices and achieving stability in the market.

OPEC+ sources told Reuters that the latest agreement will include voluntary cuts approaching two million barrels per day, including Saudi Arabia extending a voluntary reduction of one million barrels per day that it began in July.

One of the sources said that Russia will reduce production by 500,000 barrels per day, and others will also contribute to the cuts.

The Algerian Energy Minister told Reuters that his country had agreed to reduce its production by 50,000 barrels per day.

Oil prices fell after rising more than 1% earlier in the session after OPEC+ producers agreed to cuts. The price of Brent crude futures for February fell three percent to less than $81 a barrel by 1634 GMT. The first-month January contract is scheduled to expire on Thursday.

OPEC+ is focusing on reducing production with prices falling from about $98 in late September and growing concerns about weak economic growth in 2024 and expectations of excess supply.

The International Energy Agency (IEA) this month forecast a slowdown in demand growth in 2024 as “the final phase of the pandemic economic recovery dissipates and as energy efficiency gains, expansion of electric vehicle fleets and structural factors strengthen.”

However, OPEC+ sources said this week that discussions were proving difficult, as evidenced by the group postponing its meeting that was scheduled for November 26. The sources said that the delay resulted from a dispute over production quotas for African producers.

The OPEC+ meeting coincides with the opening of the United Nations COP28 climate summit, hosted by the United Arab Emirates, an OPEC member.

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