By John Ikani
Crude oil prices surged on Monday after the Organisation of Petroleum Exporting Countries (OPEC) announced surprise cuts in monthly output.
A statement released by OPEC revealed that the cartel announced a cut in output during the 48th meeting of the Joint Ministerial Monitoring Committee (JMMC).
Brent crude traded at $84.53 a barrel as of 1115 GMT, up $4.64 or 5.8%, after touching the highest in a month at $86.44.
West Texas Intermediate crude was at $80.23 a barrel, up $4.56 or 6%, after hitting its highest level since late January.
Saudi Arabia, which announced the biggest cut among OPEC members at 500,000 barrels per day, said it would start “a voluntary reduction” in its production of crude oil alongside other members of OPEC.
The cuts will begin in May and last through the end of the year, as per an official with the Saudi Ministry of Energy, who was quoted by the Saudi state-run news agency SPA.
This cut is in addition to the reduction announced by OPEC+ in October 2022, according to SPA.
Despite pressure from the United States and others advocating that the group should increase its output, OPEC and its allies had agreed in October last year to cut oil output by 2 million barrels per day in November, the deepest cut by OPEC+ since the 2020 COVID pandemic.
On Monday, OPEC reaffirmed its commitment to the Declaration of Cooperation (DoC) until the end of 2023, as decided at the 33rd OPEC and non-OPEC Ministerial Meeting on October 5, 2022.
In a precautionary measure aimed at supporting the stability of the oil market, OPEC urged all participating countries to achieve full conformity and adhere to the compensation mechanism.
According to the oil cartel, “The Committee reviewed the crude oil production data for January and February 2023 and noted the overall conformity for participating OPEC and non-OPEC countries of the Declaration of Cooperation (DoC).”
The cartel further noted that “The Meeting noted the following voluntary production adjustment announced on 2 April 2023 by Saudi Arabia (500 thousand b/d); Iraq (211 thousand b/d); United Arab Emirates (144 thousand b/d); Kuwait (128 thousand b/d); Kazakhstan (78 thousand b/d); Algeria (48 thousand b/d); Oman (40 thousand b/d); and Gabon (8 thousand b/d) starting May until the end of 2023.”
These adjustments will be in addition to the production adjustments decided at the 33rd OPEC and non-OPEC ministerial meeting.
Furthermore, the Russian Federation had also announced a voluntary adjustment of 500 thousand barrels per day until the end of 2023, which will be from the average production levels as assessed by the secondary sources for February 2023.
This will bring the total additional voluntary production adjustments by the countries mentioned above to 1.66 million b/d, as per OPEC.
