According to The Times, Saudi Arabia intends to continue its voluntary reduction of 1 million barrels per day in December 2023, as reported on November 5 by the Saudi Press Agency. This will keep the country’s production level at about 9 million barrels per day.
Concurrently, Russia, in remarks made by Deputy Prime Minister Alexander Novak on 5 November, reiterated its commitment to maintaining a 300,000 b/d reduction in exports of crude oil and oil products through the end of 2023.
Russia and Saudi Arabia have both stated unequivocally that the decision to maintain the voluntary output cutbacks will undergo a review in December 2023.
This evaluation will be critical in determining whether to deepen existing cuts even further or potentially raise output.
Saudi Arabia will make plans for January 2024 during this time, including whether to keep, expand, or reverse the voluntary cut.
The OPEC countries’ combined efforts serve as the foundation for the reasoning behind these ongoing voluntary reductions. The main objective is to strengthen the preventative actions implemented with the intention of promoting the stability and equilibrium of the oil markets.
Alongside their OPEC+ counterparts who are dedicated to upholding production discipline to sustain oil prices, industry experts anticipate that Russian oil production will stay constant until the end of 2023, according to S&P Global Commodity Insights.
On the other hand, several recent events have raised worries about possible disruptions to the world’s oil supply.
Following Hamas’ attack on Israel on October 7, some Middle Eastern producers demanded a moratorium on oil exports.
Infrastructure related to oil production and supply is also at risk from the prolonged fighting. Furthermore, there has been a surge in talks among Western authorities on the imposition of penalties.
It’s crucial to remember that, as of October 27, S&P Global Commodity Insights stated that there isn’t currently a sign of a supply crisis in the oil market. However, as of right now, there is a greater chance of a supply disruption than there was on October 6.
November 26 is the next OPEC+ ministerial meeting, which is critical for talking about production quotas and market conditions.
Additional information about the expected evolution of the global oil market in response to these ongoing developments will be given during this meeting.
It is noteworthy that the World Bank stated in its October 2023 Commodity Outlook report that prices are expected to rise in the fourth quarter of 2023 due to concerns about the Middle East conflict and geopolitical risks, as well as the contraction of OPEC+ supply and rising middle-distillate demand.
Still, these projections usually suggest that the dispute will have little effect as long as it doesn’t get worse.
The prediction also rests on the presumption that should some OPEC+ supply curbs be lifted in early 2024, global oil output will increase both inside and outside of the organization.
