OPEC+ extends voluntary cuts into Q4 2024, wider reductions into 2025
Quantum Commodity Intelligence – OPEC+ will continue to implement most production quotas until the end of this year and will extend some cuts well into 2025, the producer group said following the conclusion of the 2 June meeting.
In what was billed as a hybrid meeting, with some ministers attending the Riyadh summit in person and others joining online, the group moved to shore up prices after a sluggish performance in May and concerns that any suggestion of unwinding cuts would trigger further losses.
As expected, OPEC and its allies have agreed to maintain the most recent phase voluntary cuts until at least October, which come to around 2.2 million bpd. At the same time, it also announced extensions to the longer-term group reductions, some of which go back to the record 9.7 million bpd announced in 2020 as a response to Covid.
OPEC said that the group had agreed to "Extend the level of overall crude oil production for OPEC and non-OPEC Participating Countries in the Declaration of Cooperation (DoC) starting 1 January 2025 until 31 December 2025."
The total announced cuts currently stand at 5.86 bpd, which includes 3.66 million bpd of longer-term reductions.
According to a separate briefing document, eight countries will start unwinding some voluntary cuts in October of this year.
Regarding future bassline levels, OPEC said it would extend the assessment period by the three independent sources to the end of November 2025. This will be used as guidance for 2026 reference production levels.
However, according to reports after the meeting, the UAE has been given a higher baseline, which will allow it to increase production going forward, including a 300,000 bpd bump phased in between January and September 2025.
The statement released by OPEC did not directly reference compliance levels, but Iraq and Kazakhstan were believed to have pledged to rein in output, having overproduced persistently since the start of the year.
OPEC announced Country Required Production Levels for 2025 as follows (thousand/bpd):
- Algeria 1,007
- Congo 277
- Equatorial Guinea 70
- Gabon 177
- Iraq 4,431
- Kuwait 2,676
- Nigeria 1,500
- Saudi Arabia 10,478
- UAE 3,519
- Azerbaijan 551
- Bahrain 196
- Brunei 83
- Kazakhstan 1,628
- Malaysia 401
- Mexico 1,753
- Oman 841
- Russia 9,949
- Sudan 64
- South Sudan 124
OPEC 24,135 Non-OPEC 15,590 and OPEC+ 39,725.
The 38th OPEC and non-OPEC Ministerial Meeting will be held on 1 December 2024, while the Joint Ministerial Monitoring Committee (JMMC) will meet every two months.
Key OPEC+ decisions since 2020
April 2020
OPEC+ agrees to a record supply cut of 9.7 million bpd, oil prices rebound.
June 2020
Producers agree to extend the first phase of the 9.7 million bpd cuts for another month but announce plans for reduced cuts to 7.7 million bpd starting in August.
December 2020
Members announce a small 500,000 bpd increase for January 2021. Agree to hold meetings on a more regular basis in 2021 to review market conditions.
January 2021
Agrees to keep output steady except for small increases in Russia and Kazakhstan. Saudi Arabia announces a voluntary 1 million bpd cut for February and March.
April 2021
OPEC+ agrees to gradually increase production by 1 million bpd May-July, while Saudi to restore 1 million bpd of voluntary cuts.
June 2021
OPEC+ meeting lasts under one hour, ends with an agreement to stick with the existing plan, but no discussion on output changes for August and beyond.
July 2021
OPEC+ agrees to increase output by 400,000 bpd each month from August to December, adding 2 million bpd in total, but with the flexibility to review the proposed hikes.
December 2021
Agrees to a further 400,000 bpd hike in January after pressure from consumer countries, despite Omicron Covid surge and Q1 oversupply fears.
March 2022
May quotas set to rise by a combined 432,000 bpd, linked to higher baseline levels. Shrugs off pressure to ramp up production after Russia's invasion of Ukraine.
June 2022
OPEC+ agrees to increase output by 648,000 bpd in both July and August.
August 2022
Increase of 100,000 bpd announced for September.
September 2022
Reverses September increase, returns to August quotas.
October 2022
OPEC+ announces a headline cut of 2 million bpd from November, which analysts say will result in around 1 million bpd of actual cuts.
February 2023
Russia announces a 500,000 bpd cut starting from March.
April 2023
Several members of the OPEC+ producer group announced production cuts amounting to around 1.15 million bpd from May until the end of 2023, while Russia said it will extend its 500,000 bpd cut until the end of the year. The US government called the decision "unwise".
June 2023
Saudi Arabia set to cut production by a further 1 million bpd for July, while members agreed to extend current deals until the end of 2024. Russia followed up by reducing crude exports by 300,000 bpd.
November 2023
OPEC+ members pledge additional voluntary cuts starting in January, which include 700,000 bpd of crude oil and 200,000 bpd of Russian diesel. Most of the crude cuts are from Middle East producers. Saudi Arabia will extend its 1 million bpd of voluntary cuts.
June 2024
OPEC+ will continue current production quotas until the end of this year and will extend some cuts well into 2025
