Oil prices fall, extend slide after OPEC+ cuts underwhelm
Oil prices fell in early Asian trade on Friday, extended losses after OPEC+ producers agreed to voluntary oil output cuts for the first quarter next year that fell short of market expectations.
Brent crude futures for February fell 14 cents, or 0.2%, to $80.72 a barrel by 0005 GMT. U.S. West Texas Intermediate crude futures fell 12 cents, or 0.2%, to $75.84.
Saudi Arabia, Russia and other members of OPEC+, who pump more than 40% of the world’s oil, agreed to voluntary output cuts of about 2.2 million barrels per day (bpd) for the first quarter of 2024.
At least 1.3 million bpd of those cuts, however, were an extension of voluntary curbs that Saudi Arabia and Russia already had in place. Earlier, delegates had said new additional cuts under discussion were as much as 2 million bpd.
OPEC+’s output of some 43 million bpd already reflects cuts of about 5 million bpd aimed at supporting prices and stabilising the market.
The total curbs amount to 2.2 million bpd from eight producers, OPEC said in a statement after the meeting. Included in this figure is an extension of the Saudi and Russian voluntary cuts of 1.3 million bpd.
The 900,000 bpd of additional cuts pledged on Thursday, includes 200,000 bpd of fuel export reductions from Russia, with the rest divided among six members. Russian Deputy Prime Minister Alexander Novak said Russia’s voluntary cut would include crude and products.
The UAE said it had agreed to cut output by 163,000 bpd while Iraq said it would cut an extra 220,000 bpd in the first quarter.
Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan and Algeria were among producers who said cuts will be unwound gradually after the first quarter, market conditions permitting.
OPEC+ is focused on lower output with prices down from near $98 in late September and concerns brewing over weaker economic growth in 2024 and expectations of a supply surplus.
The general gloom surrounding China’s economy and financial markets shows little sign of lifting.