Oil prices continue to decline after lower-than-expected cuts in OPEC+ production

Oil prices fell in early Asian trading on Friday, continuing the losses that began after producers in the OPEC+ alliance agreed to voluntary reductions in oil production in the first quarter of next year, which were reductions that fell below market expectations.

Brent crude futures for February fell 14 cents, or 0.2 percent, to $80.72 a barrel by 0005 GMT. US West Texas Intermediate crude futures also fell 12 cents, or 0.2 percent, to $75.84.

Saudi Arabia, Russia and other members of OPEC+, which pump more than 40 percent of global oil, agreed to voluntary production cuts of about 2.2 million barrels per day in the first quarter of 2024.

However, at least 1.3 million barrels per day of these cuts come from extending voluntary cuts already implemented by Saudi Arabia and Russia. Delegates said earlier that a discussion was underway regarding new additional cuts of up to two million barrels per day.

OPEC+ production of about 43 million barrels per day actually reflects reductions of about five million barrels per day, with the aim of supporting prices and achieving market stability.

OPEC said in a statement after the meeting that the total cuts amount to 2.2 million barrels per day from eight producers. This figure includes an extension of the Saudi and Russian voluntary cuts of 1.3 million barrels per day.

The additional cuts of 900,000 bpd pledged on Thursday come divided by 200,000 bpd from fuel exports from Russia and the rest from six members.

The UAE said it had agreed to reduce production by 163,000 barrels per day, while Iraq said it would reduce an additional 220,000 barrels per day in the first quarter.

OPEC+’s focus on cutting production comes in light of falling prices, which had previously reached $98 in late September, as well as growing concerns about weak economic growth in 2024 and expectations of excess supplies.