On Sunday, members of the OPEC+ organization announced a coordinated reduction in crude oil production until the end of 2023, which will reach one million barrels per day, Bloomberg reported.
The Vice President of the Russian Government, Alexander Novak, announced that Russia would reduce oil production by 500,000 barrels per day by the end of the year. Moscow announced this at the same time as Saudi Arabia, Kuwait, Oman, Iraq, and the United Arab Emirates announced production restrictions, all until the end of this year.
Novak announced that for the Russian Federation to act as a responsible market participant and as a precaution against further market volatility, the Russian Federation will implement a voluntary production cut of 500,000 barrels per day by the end of 2023. This is the second time Russia has extended the restriction announced by the Russian Deputy Prime Minister in February.
In the analysis, Bloomberg points out that reducing oil production by one million barrels per day is surprising and estimates that OPEC+ is abandoning previous assurances that they will keep the supply stable so the market remains calm.
Bloomberg analysts said a significant cut in crude oil production would increase inflationary pressures worldwide, forcing central banks to keep interest rates higher for longer, increasing the risk of a recession.
Saudi Arabia is limiting production
Saudi Arabia announced on Sunday that it is limiting its production by 500,000 barrels per day from May until the end of the year, saying it is a precautionary measure to stabilize the oil market.
The United Arab Emirates announced a reduction of 144,000, Algeria by 48,000, Iraq by 211,000, Kuwait by 128,000, and Oman by 40,000 barrels per day, according to their agencies.
Kazakhstan’s energy ministry announced on Sunday that it will cut production by 78,000 barrels per day from May until the end of the year in coordination with other OPEC+ members.