What do markets expect from next week’s OPEC meeting?

Official delegates said on Monday that OPEC as well as the larger OPEC+ see no need to adjust or suggest a change of the oil production policy that is currently in place during the looming the Joint Ministerial Monitoring Committee meeting for March.

OPEC and allies chose to voluntarily decrease their collective output by 2.2 million barrels per day. However, a large portion of this came from production cutbacks that have been already applied, including the Saudi 1 million bpd voluntary output cut in the present quarter.

The OPEC+ members who had previously committed to the first quarter’s supply cuts announced at the beginning of March that they are willing to extend the cuts until the end of the second quarter.

Saudi Arabia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, Oman, and Russia are now reducing their respective crude oil production and exports in the first half of 2024 with additional voluntary reductions, on top of the voluntary cuts that OPEC+ originally announced in April 2023 and later extended until the end of 2024.

Following the indication on March 3 by the OPEC+ members that they intended to extend the cuts into the second quarter, Russia updated its production/export cut plan and said that it will drop supply by 471,000 bpd in the second quarter through reductions in oil output and exports.

According to reports, Russia will reduce output by 350,000 barrels per day in April and exports by 121,000 barrels per day. A 400,000 bpd production decrease and a 71,000 bpd export cut in May would account for the 471,000 bpd decline in Russian supply. The decrease in June would be the result of production reductions alone.

The production estimates for February show that some OPEC+ nations—Kazakhstan and Iraq, in particular—have persisted in producing beyond their allotted quotas.

Iraq and Kazakhstan pledged to follow through on the cuts that were declared in mid-February.
The second-largest OPEC producer, Iraq, declared in February that it will stick to its voluntary cut in the OPEC+ deal and will not produce more than 4 million barrels of crude oil per day.

The non-OPEC oil producer Kazakhstan pledged in the coming months to make up for not following the January limitations.