The Group noted that its decision to reduce production output is "in light of the uncertainty that surrounds the global economic and oil market outlooks and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive and preemptive, which has been consistently adopted by OPEC and Non-OPEC Participating Countries in the Declaration of Cooperation," in a statement released yesterday at the conclusion of its meeting. For individuals who didn't reach their quotas, the organisation further extended the reimbursement period to the end of March 2023.
Saudi Arabia, one of the few OPEC+ members to achieve a nearly complete cut, will therefore reduce its oil production for November by 526,000 bpd from its current quota of 11.004 bpd. However, the country's actual September production was 10.904, according to the most recent Monthly Oil Market Report from OPEC.
There will be no more production cuts necessary from other OPEC producers including Angola, Congo, Equatorial Guinea, and Nigeria who are currently producing below their November quota reductions.
Following the announcement of the production cut by OPEC and its allies early yesterday, the implications of the move became almost immediately apparent.
Industry participants remarked that this volume represents the largest reduction since the COVID-19 epidemic struck in late 2019. With demand for crude starting to revive, OPEC+ started raising production quotas in June 2021, which resulted in an increase in supply to global markets of an additional 400,000 b/d each month. In the month before to yesterday's announcement of a two million barrels per day production cut, OPEC+ lowered its output by 100,000 barrels per day.
Indeed, Goldman Sachs says such a dramatic cut is likely to push oil prices back to triple-digits over the next three months.