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Informist, Thursday, May 29, 2025

 

MUMBAI – At its 39th ministerial meeting, the Organization of the Petroleum Exporting Countries agreed to leave its formal output quotas unchanged with potential increases from the eight-member alliance that had been carrying out separate voluntary production cuts. The cartel decided to reaffirm the level of overall crude oil production for OPEC and non-OPEC participating countries in the Declaration of Cooperation until December 2026, as agreed at its 38th meeting.

 

Under the formal policy, the entire organisation has been cutting roughly 2 million barrels per day which will continue until the end of 2026. Along with this, the eight member countries – Russia and Saudi Arabia, alongside Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates – were cutting 2.2 million barrels per day additionally, which they have begun to gradually unwind.

 

These nations are now set to bring back around a combined 1 million barrels per day of the additional cut volumes. The cartel is likely to announce a production increase of 411,000 barrels per day by these nations in May and June each, and another hike of the same amount is likely in July, according to various media reports.

 

Oil prices rose shortly after the end of the OPEC+ meeting. The ICE Brent contract with July expiry closed at $64.90 per barrel, up 1.26%. The front-month July NYMEX WTI futures settled at $61.84 per barrel, up 1.56%.

 

The cartel reaffirmed the framework of the Declaration of Cooperation, signed in December 2016 and further endorsed in subsequent meetings. It also mandated a close review of global oil market conditions, oil production levels, and the level of conformity with the Declaration of Cooperation by the joint ministerial monitoring committee assisted by the OPEC secretariat. The committee's meeting is to be held every two months, it said.

 

At the meeting, the organization reaffirmed the committee's authority to hold additional meetings or to request an OPEC and non-OPEC ministerial meeting at any time to address market developments, whenever deemed necessary.

 

The cartel also reiterated the importance of adhering to full conformity and the compensation mechanism. It mandated the OPEC secretariat to develop a mechanism to assess participating countries maximum sustainable production capacity to be used as reference for 2027 production baselines for all Declaration of Cooperation countries.

 

The organization will hold the 40th OPEC and non-OPEC ministerial meeting on Nov. 30. At the time of writing this report, the July contract of WTI on NYMEX was up 1.1% at $62.50 per barrel, and Brent futures were up 1% at $64.98 per barrel.  End

 

US$1 = INR 85.46

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Taniva Singha Roy

Edited by Avishek Dutta

 

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