OPEC+ extends voluntary oil cuts until November amid market uncertainty

Eight OPEC+ member countries have agreed to extend their voluntary production cuts for two more months, until the end of November, according to a statement released by the oil alliance.

Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman have collectively decided to continue their additional voluntary oil production cuts of 2.2 million barrels per day until the end of November 2024, as per the OPEC+ statement.

Following that, these cuts will be gradually phased out on a monthly basis starting December 1, 2024. The statement emphasized "flexibility to temporarily suspend or reverse these adjustments if necessary."

During a virtual meeting on Thursday, the eight countries reaffirmed their collective commitment to ensuring full compliance with the voluntary production adjustments, the statement noted.

Compensations for Iraq and Kazakhstan

The OPEC statement also highlighted that Iraq and Kazakhstan, which had exceeded their production targets since January 2024, are part of the group agreeing to extend the cuts.

Both countries "strongly reaffirmed their commitment to the agreement and the compensation schedules submitted to the OPEC Secretariat, as outlined in the 53rd Ministerial Committee meeting on April 3, 2024."

Iraq and Kazakhstan provided detailed plans on the immediate, concrete measures being implemented to fully comply with the required production levels and meet the compensation schedules for August and September.

These measures include field maintenance plans, production cuts, and the postponement or cancellation of spot sales for August. Additionally, both nations pledged to adjust compensation plans for any excess production in August.

OPEC+ clarified that the overproducing countries have committed to fully compensate for the excess volumes by September 2025.

Iraq's Reduction Plans

Separately, Iraq’s Ministry of Oil announced in a separate statement that the country had reduced its oil exports to 3.3 million barrels per day starting August 27, in addition to cutting domestic consumption.

The ministry said this reduction "will continue in the coming months to ensure production remains within the assigned quota and to compensate for the additional quantities produced in recent months."

The ministry also emphasized that this decision reflects Iraq’s commitment to OPEC+ production cut agreements, in line with discussions during the recent visit of OPEC’s Secretary-General to Baghdad.

The price of Brent crude surged by more than 1.7% during Thursday's trading session after reports of the extension in production cuts by the alliance.

However, prices quickly reversed these gains following the statement, settling at $72.7 per barrel, the lowest level in nearly 10 months.

This decline was driven by disappointing economic data from China and concerns over the strength of the U.S. economy.
In June, the OPEC+ alliance, led by Saudi Arabia and Russia, agreed on a plan to gradually restore oil supplies that had been restricted since 2022.

However, officials from the alliance have consistently emphasized that "increases can be temporarily halted or reversed" if necessary.