Price Fall
OPEC may pause phasing out of voluntary output cuts on market conditions
This story was originally published at 21:18 IST on 1 August 2024
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NEW DELHI – The Joint Ministerial Monitoring Committee of the Organization of the Petroleum Exporting Countries today said the gradual phasing out of the voluntary production cuts of crude oil by certain members of the cartel could be paused or reversed depending on market conditions, according to an official release.
In June, OPEC and its allies extended their longstanding output cuts till the end of 2025 to keep oil prices at the level desired by the cartel. OPEC and its allies have withheld 3.66 mln barrels per day of crude from the market since last year, in addition to voluntary cuts of 2.2 mln bpd by eight members of the cartel.
However, in June, OPEC said the voluntary cuts by certain members, including Saudi Arabia's 1-mln-bpd reduction, would be extended till the end of September and then gradually phased out by September 2025.
Since June, global oil prices have fallen owing to the poor demand outlook from the world's largest importer of the commodity, China. "Bearish oil demand accompanied by ample supplies have erased geopolitical risk premiums in recent weeks, weighing on oil prices," Serena Huang, head of Asia Pacific analysis at Vortexa, told Informist.
The fall in oil prices has led OPEC's ministerial committee to rethink the decision taken by the cartel in June to gradually phase out voluntary production cuts starting later this year. The economies of most oil-exporting countries within OPEC rely heavily on crude oil shipments.
Furthermore, the Joint Ministerial Monitoring Committee of OPEC said Iraq, Kazakhstan, and Russia have assured the cartel of adhering to their respective output quotas. These three countries have also submitted their compensation plans for the overproduced volumes of crude oil since January, according to the press release.
At the time of writing, the price of Brent crude oil on the Intercontinental Exchange was $80.72 per bbl, down 0.1% from the previous close. End
US$1 = 83.72 rupees
Reported by Sayantan Sarkar
Edited by Rajeev Pai
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