All articles tagged with #oil production cuts
OPEC+ has agreed to extend its oil production cuts through the end of 2025, potentially raising energy prices in the U.S. ahead of the 2024 elections. This move could create a supply deficit in the global market, leading to higher prices. The Biden administration is concerned about the impact on energy costs and is considering measures like releasing gasoline reserves to mitigate price spikes.
OPEC+ has decided to extend its significant oil production cuts into 2025 to stabilize the market amid weak demand growth, high interest rates, and increasing U.S. production. The group will gradually phase out some cuts starting in October 2024, while postponing discussions on individual member capacity targets until November 2025. This move aims to address market concerns and maintain solidarity within the group.
Russia's Deputy Prime Minister Alexander Novak stated that the OPEC+ group is prepared to implement additional measures and deepen oil production cuts in the first quarter of 2024 to prevent market volatility and speculation. Novak emphasized that if the current actions are insufficient, OPEC+ countries are ready to take further steps to eliminate speculation and volatility. The recent OPEC+ supply decision, which included 2.2 million barrels per day of cuts for the first quarter of 2024, was deemed underwhelming by the market and failed to address disagreements over cuts and quotas. Analysts suggest that while the decision may erase the expected deficit early next year, it leaves uncertainty regarding future actions. Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman also indicated that the production cuts could extend beyond March 2024 if necessary.
OPEC+ members, including Saudi Arabia, Russia, and Brazil, have agreed to significant voluntary oil production cuts totaling 2.2 million barrels per day in the first quarter of 2024. Saudi Arabia will extend its voluntary production cut of 1 million barrels per day for an additional three months. Other countries, such as Russia, Iraq, and the United Arab Emirates, will also reduce their oil production. Despite these efforts, global oil prices have fallen due to record production in the United States and concerns about weakening demand, particularly in China.
OPEC and its Russia-led allies are considering new oil production cuts of up to 1 million barrels a day, which could be announced at a virtual meeting on Thursday. Despite tensions in oil markets due to the conflict in the Middle East, the move is expected to raise oil prices.
The OPEC+ group is not expected to ease the ongoing production cuts during their meeting this week, despite the tightening oil market and concerns about demand destruction if prices remain high. Saudi Arabia, the largest crude oil exporter, has extended its extra 1 million bpd cut until the end of the year, contributing to the recent rally in oil prices. Some analysts suggest that Saudi Arabia may start easing the cuts sooner than expected to avoid overheating the market.
Oil prices fell after reaching their highest level in over a year, with U.S. West Texas Intermediate futures declining 2.09% to $91.72 per barrel and global benchmark Brent down 1.4% at $95.18. The drop in prices was driven by a decrease in crude stocks at the Cushing storage hub in Oklahoma, which fell to their lowest level since July 2022. The ongoing production cuts by OPEC and its allies, including Saudi Arabia and Russia, have contributed to a "pretty robust deficit" in the global oil markets. While prices are expected to remain high for the rest of the year, there are concerns about long-term demand destruction if prices reach triple digits.
Gas prices in the US are rising due to a combination of factors, including extreme heat and oil production cuts. The summer's record temperatures have caused refineries to operate below normal capacity, resulting in a loss of hundreds of thousands of barrels each day. Additionally, major oil-producing countries in the OPEC+ alliance, such as Saudi Arabia and Russia, have implemented supply cuts. While some refineries are struggling, those that are able to operate are making significant profits. The highest gas prices are currently in California, while Mississippi has the lowest average. It is uncertain how gas prices will evolve in the coming weeks, as the risk of hurricanes and tropical storms could further impact refineries. To save on gas, drivers are advised to regularly check tire pressure, use cruise control when possible, avoid overfilling the tank, and remove unnecessary items from the car's trunk.
Saudi Arabia's decision to extend oil production cuts may lead to an economic contraction in the country, which was the fastest-growing economy in the Group of 20 last year. The boom was driven by record crude output and high oil prices, but a global economic slowdown has reduced crude demand. The economy is projected to fall by 0.1% this year if production is raised in September and by 1% if the cuts continue. The non-oil economy, however, remains strong, with private companies outside the oil industry experiencing record-high orders. The government aims to transform the non-oil economy under its Vision 2030 plan. The decline in petrodollars has pushed the budget into a deficit and may require increased borrowing. Saudi Arabia's breakeven oil price is nearly $81 a barrel, but it rises to almost $100 a barrel when considering spending on giga-projects. Oil remains crucial to the country, accounting for a significant portion of exports.
Saudi Arabia and Russia have announced new oil production cuts in an effort to stabilize the global oil market. The two countries, along with other members of the OPEC+ group, have agreed to reduce their output by 1 million barrels per day in February and March. This decision comes as oil prices have been under pressure due to the ongoing COVID-19 pandemic and concerns about oversupply.
OPEC Plus, led by Russia and Saudi Arabia, has decided to extend oil production cuts through 2024 in an effort to achieve and sustain a stable oil market. The move is not expected to affect gas prices in the United States, which have remained flat even after Memorial Day weekend travel. The national average of gas prices was $3.55 per gallon as of Sunday.
Gasoline prices are expected to surge ahead of peak driving season due to the announcement of oil production cuts by OPEC. The production cuts will make it more expensive to bring barrels to the gas station and turn them into gasoline. The average price of gasoline is expected to hit $3.60 a gallon in the coming weeks, and it is possible that it could reach $5 a gallon during peak-driving months in the summer. The fossil fuel industry is urging the U.S. to boost domestic production to reduce reliance on foreign producers.
The OPEC+ oil cartel's surprise decision to cut production will lead to higher gas prices for US drivers, with prices already up about 7 cents nationwide. Experts predict that the cuts could eventually push the price beyond $100 a barrel, leading to hikes of roughly 26 cents per gallon. This, on top of the usual seasonal increase, could make the next few months "pretty painful for drivers." The delicate oil market is overly sensitive to global events, making it difficult to predict how high prices could go. The price hikes will likely impact people's spring and summer plans, with some Americans shortening road trips due to high prices.
OPEC+ member countries, led by Saudi Arabia, Iraq, United Arab Emirates, and Kuwait, announced a surprise oil production cut of about 1.15 million barrels per day from May through the end of this year. The move aims to support the stability of the oil market but will likely cause oil prices to rise, leading to higher gas prices for consumers. The US has criticized the decision, while Russia previously announced a unilateral production cut of 500,000 BPD in February.