Russia Says OPEC+ Ready To Deepen Oil Output Cuts If Needed

By Charles Kennedy of OilPrice.com,

The OPEC+ group is ready to take additional measures and deepen the oil production cuts in the first quarter of 2024 to avoid volatility and speculation on the market, Russia’s Deputy Prime Minister Alexander Novak said on Tuesday.

“The timely actions of OPEC+, thanks to which about 2.2 million barrels per day will be held off the market in the first quarter of next year, will allow the period of low demand to pass painlessly in the first quarter of 2024,” Novak told Russian news agency TASS.

“I would also like to note that if the current actions are not enough, OPEC+ countries are ready to take additional actions to eliminate speculation and volatility,” Novak added.  

Last week, OPEC+ announced 2.2 million bpd of cuts for the first quarter of 2024, but these include Saudi Arabia rolling over its voluntary cut, Russia deepening crude and fuel export cuts by 200,000 bpd, and several other OPEC+ members announcing voluntary production reductions for the first quarter of 2024.

Overall, the announcements after the meeting were underwhelming and failed to convince the market that OPEC+ hasn’t had disagreements over cuts and quotas leading to the meeting, as became evident from the lack of a group-wide cut.

The OPEC+ supply decision, which the market found unconvincing, will likely erase the expected deficit early next year but leaves the question ‘what’s next’ unanswered, analysts say.

Novak’s comments on Tuesday follow remarks from Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman, who told Bloomberg on Monday that the OPEC+ production cuts could extend beyond March 2024 if the market requires it, criticizing commentators for failing to understand the output deal.

The Saudi energy minister suggested that this would change once “people see the reality of the deal”.

“I honestly believe that the 2.2 million will overcome the usual inventory build that usually happens in the first quarter,” Prince Abdulaziz bin Salman told Bloomberg.