Major oil producers decide to maintain output cut targets

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries held the 34th ministerial meeting via video on the 4th and decided to maintain the production reduction target set by the 33rd ministerial meeting.

The 33rd ministerial meeting on October 5 this year decided to reduce monthly production by an average of 2 million barrels per day on the basis of August production starting from November this year, equivalent to 2% of the world’s average daily oil demand.

OPEC issued a statement after the ministerial meeting on the 4th, emphasizing that the decision to cut production at the October meeting was entirely out of market considerations.

As the market is worried about the outlook of the world economy, the decision of major oil-producing countries to significantly cut production failed to form effective support for international crude oil prices. The price of the main contract of crude oil futures in New York has fallen from more than US$120 per barrel in June this year to around US$80 per barrel at present. London Brent crude oil futures prices also showed a similar trend.

On the 2nd, the European Union, the Group of Seven, and Australia announced that they would set a price ceiling of US$60 per barrel for crude oil exported by sea from Russia, which brought new uncertainties to the market. The Russian side stated that proposals such as restricting oil imports from Russia and setting a price ceiling on Russian oil can only lead to a surge in oil prices like natural gas prices.

It is reported that the 35th ministerial meeting of OPEC and non-OPEC oil-producing countries will be held on June 4, 2023. However, major oil-producing countries said that they will temporarily hold ministerial meetings when necessary to deal with changes in the crude oil market.

In April 2020, due to the impact of the new crown epidemic and other factors on oil demand, OPEC and non-OPEC oil-producing countries reached an agreement to reduce production. From May 2021, with the recovery of oil demand, major oil-producing countries began to gradually increase oil production. In September this year, the major oil-producing countries announced for the first time in more than a year that they would cut their monthly production, and cut their monthly production in October this year by an average of 100,000 barrels per day.

 

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