Home » Oil, because OPEC+ does not convince the market this time too

Oil, because OPEC+ does not convince the market this time too

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Oil, because OPEC+ does not convince the market this time too

On this occasion, Riyadh also recalls the other extra cut, of 500 thousand bd, which it has been carrying out since April 2023, with the intention of continuing until the end of 2024. And for the first time it explicitly mentions an exit strategy: «i additional volumes cut will be restored gradually, based on market conditions.”

The Saudi line was supported by 7 OPEC+ countries, each of which issued independent statements in the following hours. Additional cuts until June, therefore, also for 4 other OPEC producers – United Arab Emirates, Kuwait, Iraq and Algeria, for a total of 569 thousand bg – and for 3 non-OPEC countries, allies in the coalition: Kazakhstan, Oman and also the Russia.

At least apparently, the only additional tightening could come from Moscow, although theoretical and very difficult to verify. The Russian Federation – authorized by OPEC+ to divide the cuts as desired between crude oil, condensates and refined products, considering not only production but also exports – will intervene in the next quarter above all to curb the supply of crude oil, declared Deputy Prime Minister Alexander Novak.

The outline shared with OPEC+ is detailed, perhaps to please the Saudis, unnerved by the lack of clarity and the poor compliance with commitments demonstrated so far by Moscow. In the month of April, Russia promises to cut 350 thousand barrels of production and 121 thousand barrels of exports, in May the reduction will be 400 thousand and 71 thousand barrels respectively, while in June the goal is to cut 500 thousand barrels entirely from production.

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Smoke in the eyes perhaps. Or at least this is probably the impression of market operators. Oil prices will start to rise again if and when, in addition to the smoke, we also begin to “see the roast”.

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