[1/3] Photo of Saudi Energy Minister Prince Abdulaziz bin Salman Al-Saud attending the OPEC meeting in Vienna. /Picture taken June 4, 2023 in Vienna, Austria/REUTERS/Leonhard Foeger
VIENNA, June 4 (Reuters) – Saudi Arabia will pledge new voluntary output cuts as part of a broader OPEC+ deal to curb production, sources told Reuters, as the group faces falling oil prices and a supply glut.
The group, known as OPEC+, reached an agreement on output policy after seven hours of talks, the sources said.
Two OPEC+ sources said the group would maintain an existing output deal in 2023 and make additional cuts in 2024, with new production bases for members from which the cuts are made.
It’s unclear when Saudi will start making voluntary cuts or how much Riyadh and OPEC+ will cut in total.
OPEC+, a group of allies led by Russia and the Organization of the Petroleum Exporting Countries, pumps 40% of the world’s crude oil, meaning its policy decisions can have a huge impact on oil prices.
At OPEC+ on Friday, sources told Reuters the additional output cuts would be up to 1 million barrels per day on top of the existing voluntary cuts of 2 million bpd and 1.6 million bpd, a surprise move announced in April that took effect in May. .
The April announcement helped push oil prices up $9 a barrel to above $87, but they quickly retreated under pressure from worries about global economic growth and demand. On Friday, Brent, the international benchmark, was at $76.
If approved, a new cut would bring the total cut to 4.66 million bpd, or 4.5% of global demand.
Generally, production cuts take effect one month after they are agreed, but ministers can also agree to implement later.
Last week, Saudi Arabia’s Energy Minister Prince Abdulaziz said investors betting on lower oil prices or falling prices should “be careful,” in what many market watchers interpreted as a warning about further supply cuts.
The West accused OPEC of manipulating oil prices and undermining the global economy through high energy costs. The West has accused OPEC of supporting Russia in defiance of Western sanctions over Moscow’s invasion of Ukraine.
In response, OPEC insiders have said that Western money printing over the past decade has fueled inflation and forced oil-producing nations to act to preserve the value of their key exports.
Asian countries such as China and India, which buy a large share of Russia’s oil exports, have refused to join Western sanctions against Russia.
During Sunday’s meeting, OPEC’s most influential members and the biggest Gulf producers, led by Saudi Arabia, tried to persuade low-producing African countries such as Nigeria and Angola to have more realistic output targets, the sources said.
Nigeria and Angola have long been unable to produce in line with their targets, but resisted lower baselines because the new targets could force them to make real cuts.
In contrast, the UAE has claimed a higher base in line with its growing productivity, but that means its share of the overall cuts could decline.
OPEC has denied media access to its headquarters to reporters from Reuters and other news outlets.
Reporting by Ahmed Khader, Alex Lawler, Maha El Dahan and Julia Payne; Written by Dmitry Zhdanikov; Editing by Hugh Lawson, Emilia Sithole-Madaris and Barbara Lewis
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