The Strategist

FT reports likely extension of OPEC+ restrictions on oil production

11/21/2023 - 08:26

According to the Financial Times, which cited four sources close to the kingdom's government, Saudi Arabia, the top oil producer among OPEC+ nations, is thinking about extending the voluntary ban on oil production until at least spring 2024.

The voluntary production cap of one million barrels per day remains in place until the end of the year. It was put into place during the summer. The FT notes that Saudi Arabia is currently producing 9 million barrels of oil per day, with a maximum capacity of 12 million barrels.

One source stated that OPEC+ is debating a further cut in oil production of up to 1 million barrels per day. The group's next meeting may include a discussion of these two proposals.

The FT reports that the drop in oil prices to multi-month lows last week is the primary cause for oil-producing nations' consideration of enacting additional production restrictions.

Meanwhile, the conflict between Hamas and Israel and the humanitarian crisis in the Gaza Strip are also contributing factors, as is the resentment among OPEC members, particularly Kuwait, Algeria, and Iran. Another source who spoke with the publication said, "You can't underestimate the level of anger and the pressure that Gulf leaders are feeling from their populations, who want to see some kind of response to what is happening."

The sources emphasized that no decision has been made regarding the extension or increase of the production restrictions.