Background on OPEC+ and its Relevance
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, play a crucial role in the global oil market. Comprising 23 countries, including OPEC members and non-OPEC allies like Russia, the group aims to stabilize oil prices by coordinating production levels. Their decisions significantly impact global energy markets, affecting millions of consumers and businesses worldwide.
OPEC+ Confirms Production Calendar Amid Low Oil Prices
On Wednesday, OPEC+ ministers confirmed their production schedule, allowing eight members to increase output despite the low oil prices. The current benchmark crude price of around $60 to $65 per barrel did not prompt a revision of quotas by the cartel. Instead, OPEC decided to “reaffirm the global crude production level” agreed upon until December 31, 2026.
Existing Production Cuts
The collective reductions of approximately 2 million barrels per day and additional reductions by some member countries of 1.65 million barrels per day remain in place.
Focus on Additional Voluntary Cuts
The oil market’s attention is centered on the third package of “additional voluntary cuts,” as OPEC calls them, implemented by eight countries.
- Initially, Riyadh, Moscow, and the other six members who reduced daily production by 2.2 million barrels decided on a gradual reintroduction.
- However, in early April, they announced an acceleration of this process, causing a drop in oil prices.
- This group increased volumes by 411,000 barrels per day for May and June, which is three times more than initially anticipated. They will announce their plans for July on Saturday, potentially leading to another significant increase.
Key Questions and Answers
- What is OPEC+? OPEC+ is a grouping of 23 countries, including the Organization of the Petroleum Exporting Countries (OPEC) members and non-OPEC allies like Russia. The group coordinates production levels to stabilize oil prices and maintain market balance.
- Why is OPEC+ relevant? OPEC+ significantly impacts global energy markets, affecting millions of consumers and businesses worldwide through their decisions on production levels.
- What is the current situation with oil prices? Despite low oil prices around $60 to $65 per barrel, OPEC+ has decided to maintain its production calendar.
- What are the additional voluntary cuts? Eight countries within OPEC+ have implemented additional voluntary cuts of approximately 3.85 million barrels per day, with plans to potentially increase these cuts further.
