Weakening Oil Prices Force OPEC+ to Consider Cuts

So far this year, OPEC+ members have reduced operating oil capacity by over 5 million barrels per day. This equates to roughly 5% of global production.

OPEC+ is mulling additional supply cuts, to be discussed at its next meeting. The move is being considered as a means to fight weakening global oil prices.

Saudi Arabia, the leading oil producer, has already committed to cutting 1 million barrels per day and this is likely to continue into the first fiscal quarter of 2024.

The price of West Texas Intermediate crude oil (WTI) was $78.21 per barrel on Monday, down 16.5% from the previous high of $93.68 per barrel on Sept. 27.

Although the cuts have not been confirmed, analysts believe the reduction in supply reveals the inability of the organization to stop falling global oil prices amid an increase in production from non-OPEC+ countries—primarily the U.S. and Brazil.

Despite existing OPEC+ production cuts, the International Energy Agency (IEA) predicts a global surplus of oil-related products to emerge by early 2024, which it expects to further deflate global prices.

The IEA has previously predicted that the world will reach peak demand for oil, gas, and coal by 2030. Still, global oil output is expected to increase by 1.5 million barrels per day in 2023 due to non-OPEC+ production expansions, reaching all-time record cumulative levels in both 2023 and 2024.