OPEC Production Cuts 🛢

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OPEC Production Cuts

In a crucial meeting held on Sunday, the influential Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, decided not to change their planned oil production cuts for the year. Saudi Arabia, a key player in the coalition, announced an additional voluntary one-month 1 million-barrel-per-day cut starting in July, with the option for further extension. This decision brings the kingdom’s total voluntary declines to 1.5 million barrels daily, curbing its production to 9 million barrels.

Prior to the meeting, Saudi oil minister Prince Abdulaziz bin Salman issued a warning to oil market speculators, hinting at the possibility of another supply cut. The outcome of these deliberations will be revealed when the oil futures market opens today, as the current oil prices have been subjected to global financial turbulence throughout the year.

Additionally, the OPEC+ alliance agreed to review baselines, which serve as the starting levels for production cuts during their agreements. These baselines, often reused in subsequent OPEC+ agreements, have significant implications as they determine output ceilings. The review of baselines for 2025 will follow a comprehensive study conducted by oil analysts IHS, Wood Mackenzie, and Rystad Energy, assessing the output capacities of member countries. What do you think about OPEC’s decision? And how will its effects be seen over the next few months?

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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