Explainer-What new OPEC+ oil output cuts are in place after Thursday deal

FILE PHOTO: A view of the logo of the Organization of the Petroleum Exporting Countries (OPEC) outside their headquarters in Vienna, Austria, November 30, 2023 (REUTERS/Leonhard Foeger/File Photo)

LONDON : OPEC+ oil producers on Thursday agreed to voluntary output cuts totalling about 2.2 million barrels per day (bpd) for the first quarter of 2024 led by Saudi Arabia rolling over its current voluntary cut.

Included in this figure is an extension of existing Saudi and Russian voluntary cuts of 1.3 million bpd, meaning the new element of the cut is about 900,000 bpd. The new cuts come on top of earlier curbs announced in various steps since late 2022.

OPEC+ negotiations over production quotas have often been difficult in the past, most recently at their June meeting.

WHAT CUTS WERE IN PLACE BEFORE THURSDAY?

OPEC+ in June extended oil output cuts of 3.66 million barrels per day (bpd), or about 5 per cent of daily global demand, until the end of 2024.

In addition, Saudi Arabia since July has been making a 1 million-bpd voluntary reduction in output lasting until the end of December 2023. A Russian cut in oil exports of 300,000 bpd also lasts until the end of 2023.

HOW DOES THE NEW DEAL AFFECT OUTPUT TARGETS?

The latest round of cuts was announced by the individual countries on Thursday at the end of their online meeting.

OPEC+ issued a statement summarising the voluntary cuts as amounting to 2.2 million bpd and said they come on top of earlier ones announced in April 2023.

OPEC+ also revised 2024 targets for Nigeria, Angola and Congo after reviews by outside analysts. Angola has protested to OPEC about its lower 2024 quota which it says is too low.

The following table shows OPEC+ pledged cuts and production targets for the first quarter of 2024 in millions of barrels per day, based on information from OPEC, individual nations and Reuters calculations.

Country Q1 2024 Implied Q1 Output Actual

voluntary cuts 2024 targets** target after output (Oct pledged Q1 2024 2023)*

Algeria 0.051 0.908 0.959 0.96

Angola 0.000 1.100 1.100 1.15

Congo 0.000 0.277 0.277 0.26

Equatorial 0.000 0.070 0.070 0.06

Guinea

Gabon 0.000 0.169 0.169 0.22

Iraq 0.220 4.009 4.22 4.38

Kuwait 0.135 2.413 2.548 2.57

Nigeria 0.000 1.500 1.500 1.35

Saudi Arabia 1.000 9.000 9.978 9.01

UAE 0.163 2.912 3.075 3.25

Azerbaijan 0.000 0.551 0.551 0.49

Kazakhstan 0.082 1.468 1.55 1.63

Mexico 0.000 1.753 1.753 1.67

Oman 0.042 0.759 0.801 0.8

Russia*** 0.500 8.949 9.449 9.53

Bahrain**** 0 0.196 0.196 0.85

Brunei 0 0.083 0.083

Malaysia 0 0.401 0.401

South Sudan 0 0.124 0.124

Sudan 0 0.064 0.064

Total OPEC-10 1.569 22.358 23.896 23.21

Total Non-OPEC 0.624 14.348 14.972 14.98

Total OPEC+ 2.19 36.706 38.868 38.19

* IEA figures

** Angola, Congo and Nigeria targets taken from OPEC statement putting their achievable production at this level

*** Russia is cutting its oil and product exports by 300,000 bpd until the end of 2023 and promised to deepen the cuts to 500,000 bpd of oil and oil product exports in the first quarter 2024.

**** Figure is total for Bahrain, Brunei, Malaysia, Sudan and South Sudan