The energy ministers of the leading OPEC+ producers presented a united front on Thursday, aiming to ease market concerns about oversupply and stating that the oil production plans announced this weekend could always be adjusted or reversed.
OPEC+ extended most oil output reductions into 2025. However, they also indicated that some voluntary cuts could begin to be unwound after the third quarter of 2024, depending on market conditions. The potential for OPEC+ barrels to enter the market in the fourth quarter of the year led to a 5% drop in oil prices in the two days following the group’s announcement on Sunday.
Most analysts have commented that the alliance’s announcement is bearish for oil prices due to the plan to begin unwinding some of the cuts. Analysts also doubt that market conditions will allow the group to start gradually adding supply in the fourth quarter of 2024. OilPrice.com reports that in response to the oil sell-off on Monday and Tuesday, the energy ministers of Saudi Arabia and the United Arab Emirates (UAE), along with Russia’s top oil official and deputy prime minister, sought to reassure the market on Thursday. They emphasized that OPEC+ understands the situation and that the market will soon realize the group has made the right decision.
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“It’s a year-and-a-half agreement, it has all the mechanics, some of the mechanics are not new; we have also exercised it before,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the St Petersburg International Economic Forum, as quoted by Reuters. “Especially this issue of pausing or reversing,” he added.
Russia’s Deputy Prime Minister Alexander Novak stated that “OPEC’s decision this weekend is positive for the oil market and helps stabilize it.”
The UAE’s Energy Minister, Suhail Al Mazrouei, remarked at the same event in Russia, “Sometimes the market doesn’t understand decisions. It takes time to analyze.”
