OPEC+ cartel sticks to status quo on oil production

New Delhi: The OPEC+ cartel maintained a status quo on its oil production for October at a meeting held on Sunday to review global market conditions and outlook.

The seven OPEC+ countries — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, plan to draw up a new agreement on quotas to be allocated to each member before they ⁠decide on their next output targets.

The oil cartel had previously announced additional voluntary adjustments in April and November 2023.

“The seven countries reiterated their collective commitment to achieve full conformity with the Declaration of Cooperation. The seven OPEC+ countries will continue to hold monthly meetings to review market conditions. The next meeting will be held on October 4,” according to a statement issued after the meeting.

The OPEC+ on Aug 2 approved an increase in its crude production quota by around 188,000 barrels per day from September, which restores the earlier production cuts that were rolled out by the oil cartel in 2023.

The decision to increase production was taken by the seven key OPEC+ producers.

However, the decision of OPEC+ to increase production have a limited impact on global oil supplies as the Middle East conflict continues to disrupt oil and gas exports as the Strait of Hormuz, through which 20 per cent of the world’s oil and gas exports transit, remains choked.

Consequently, higher production quotas do not automatically translate into more oil reaching global buyers.

Higher official quotas do not necessarily mean that producers can actually deliver the additional crude.

Russia is facing pressure on its oil industry after repeated Ukrainian drone attacks striking deep into Russian territory to hit energy infrastructure.

The country’s production is currently around 9 million barrels per day, below its OPEC+ target of about 9.8 million barrels per day.

The UAE’s exit from the OPEC+ group in May has added another layer of uncertainty. Its departure followed years of frustration over production cuts and has raised questions about how much longer OPEC+ members will remain willing to accept coordinated limits.

Oil prices were hovering at around $91.5 a barrel during the end of the week, rising by 8 to 10 per cent rise as the US and Iran went in for a fresh round of missile attacks.

IANS