OPEC+ is not worried about the lack of market reaction to the recent decision to cut oil production, OPEC Secretary General Haytham al-Ghaysna told reporters at the organization’s 8th International Seminar in Vienna, Interfax reports.
Al-Ghais recalled that in 2023, oil demand is expected to grow by 2.3 million barrels per day by 2022, as well as an increase in supplies from non-OPEC countries.
“It’s hard to say whether there is a balance in the market now, we look at the level of commercial stocks in the OECD countries, compare with the average five-year level (for 2015-2019 – IF),” he said.
Al-Ghais does not consider the decision to cut production to be “strange”.
“Everyone knows that in the first half of the year there was a large surplus in the market for many reasons – due to the slowdown in global economic growth, unfulfilled expectations of China’s economic recovery after the pandemic,” the OPEC Secretary General emphasized.
He noted that free production capacity is limited. At the same time, the decision to reduce production will allow to have more production capacity and prevent the supply shock that took place in the past.
In early June, the participants in the OPEC+ agreement agreed to reduce the level of oil production quotas for 2024 – by another 1.4 million bpd – to 40.46 million barrels per day. Countries that have voluntarily reduced production by 1.66 million b/d since May will extend the cuts for the whole of 2024, Saudi Arabia will further reduce production by 1 million b/d as early as 2023 as a “icing on the cake” and will think about the possible extending such a presentation every month, depending on the situation on the market to stabilize it.
