The eight OPEC+ countries that previously announced additional voluntary production adjustments in April and November 2023 have agreed to move ahead with planned output hikes, starting in April.
The decision came as a surprise to some commentators, with market consensus suggesting the group would postpone the restart as they had done three times since the initial agreement was signed in June 2024.
Brent crude futures fell 2.18% to US$71.22 per barrel on the news, while US West Texas Intermediate crude futures dropped 2.35% to US$68.12 per barrel.
OPEC confirmed that Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman met remotely to review global market conditions.
After confirming healthy market fundamentals and a positive market outlook, the group reaffirmed their decision of 5 December 2024 to proceed with the gradual and flexible return of the voluntary adjustments.
The adjustments will begin at 2.2 million barrels per day from 1 April 2025, while remaining adaptable to evolving conditions.
OPEC said this leaves the door open for the gradual increase to be paused or reversed, subject to market conditions.
“This flexibility will allow the group to continue to support oil market stability,” OPEC said in a statement.
“The eight member countries reiterated their collective commitment to full conformity with the additional voluntary production adjustments as agreed on 3 April 2024.”
“They also confirmed their intention to fully compensate for any overproduced volumes since January 2024 in accordance with the plans submitted to the OPEC Secretariat, ensuring that all compensations are completed by June 2026.”
Countries with overproduced volumes have also agreed to front-load their compensation plans so that more of the compensation is paid sooner.
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