Oil prices rise as OPEC announces monthly output cut

The prices of crude oil rose on Monday after the Organisation of Petroleum Exporting Countries (OPEC) announced surprise cuts in monthly output.

OPEC on Monday announced a cut in output at the 48th meeting of the Joint Ministerial Monitoring Committee (JMMC), according to a statement released by the organisation.

Checks by PREMIUM TIMES Monday morning showed that Brent crude traded at $84.53 a barrel as of 1115 GMT, up $4.64, or 5.8 per cent, after touching the highest in a month at $86.44.

West Texas Intermediate crude was at $80.23 a barrel, up $4.56, or 6 per cent, after hitting its highest level since late January.

Saudi Arabia announced the biggest cut among OPEC members at 500,000 barrels per day. On Sunday, it said it would start “a voluntary reduction” in its production of crude oil, alongside other members of OPEC.

The cuts will start in May and last through the end of the year, an official with the Saudi Ministry of Energy was quoted as saying by the Saudi state-run news agency SPA.

The cut is in addition to the reduction announced by OPEC+ in October 2022, according to SPA.

OPEC and its allies had in October last year agreed to cut oil output by 2 million barrels per day in November, the deepest cut by OPEC+ since the 2020 COVID pandemic.

The decision came despite pressure from the United States and others advocating that the group should increase its output.

On Monday, OPEC said the members of the Joint Ministerial Monitoring Committee (JMMC) reaffirmed their commitment to the Declaration of Cooperation (DoC) which extends to the end of 2023 as decided at the 33rd OPEC and non-OPEC Ministerial Meeting on 5th of October 2022.

It noted that this is a precautionary measure aimed at supporting the stability of the oil market.

The oil cartel however urged all participating countries to achieve full conformity and adhere to the compensation mechanism.

“The Committee reviewed the crude oil production data for January and February 2023 and noted the overall conformity for participating OPEC and non-OPEC countries of the Declaration of Cooperation (DoC).

“The Meeting noted the following voluntary production adjustment announced on 2 April 2023 by Saudi Arabia (500 thousand b/d); Iraq (211 thousand b/d); United Arab Emirates (144 thousand b/d); Kuwait (128 thousand b/d); Kazakhstan (78 thousand b/d); Algeria (48 thousand b/d); Oman (40 thousand b/d); and Gabon (8 thousand b/d) starting May until the end of 2023,” the oil cartel said.

It said these will be in addition to the production adjustments decided at the 33rd OPEC and non-OPEC ministerial meeting.

“The above will be in addition to the announced voluntary adjustment by the Russian Federation of 500 thousand barrels per day until the end of 2023, which will be from the average production levels as assessed by the secondary sources for February 2023.

“Accordingly, this will bring the total additional voluntary production adjustments by the above-mentioned countries to 1.66 million b/d,” the oil cartel said.