OPEC+ countries have reached a deal after several hours of negotiations to extend their production cuts agreement into 2024. The agreement also includes an extension of the voluntary cuts announced in April, which will now remain in effect until 2024. While official production targets will remain unchanged for the rest of the year, new production targets have been set for 2024, with some countries seeing an increase in their allocation, while others will see cuts. Angola, Equatorial Guinea, Gabon, Nigeria, Azerbaijan, Brunei, Malaysia, and Sudan will all receive reductions, while the United Arab Emirates will get an increase of approximately 200,000 barrels per day in its target.
The most notable announcement from the talks is the additional voluntary cut of 1 million barrels per day by Saudi Arabia, which will commence in July and could extend beyond that. This cut comes on top of the previous voluntary cut of 500,000 barrels per day announced in April, and is the lowest production level for the country since June 2021. Saudi Energy Minister Prince Abdulaziz bin Salman has managed to surprise many with this move, which he stated is a warning to speculators to "watch out".
While the United Arab Emirates emerged as the main beneficiary from the negotiations, some African members had to give up part of their allocated quotas to accommodate the changes. This has caused some tension and political disagreements, leading to long discussions and late-night sessions in Vienna hotels.
The discussions centred on changes to production quotas from which cuts are calculated, with some African nations still hesitant to accept the proposals. Angola, for example, is opposed to a deal that would cut its benchmark production level, which would impact the country's future output and investment attractiveness. Angola aims to boost crude exports next month, which will be the highest since October 2020, but still below its current target. The country plans to bring several new offshore oil fields into operation in the next year, including TotalEnergies' 30,000 barrel a day Begonia tie-back to Pazflor.
The extended production cuts and voluntary quotas will have a net effect of more OPEC+ oil reaching the market at the start of next year, assuming no changes occur in the interim. Although there are no specific details about the new production targets for each country, the additional cuts and changes represent OPEC+'s commitment to stabilise the oil market in the long term.