OPEC+ announced on Sunday that the voluntary production cut of 2.2 million barrels per day planned for the first quarter of this year will continue in the next quarter.
Brent fell 0.05 percent to $83.52 per barrel on Monday, while US West Texas Intermediate futures (WTI) fell 0.19 percent to $79.82 per barrel.
Oil prices fell on Monday after OPEC+ agreed to extend voluntary production cuts into the second quarter to support the short-term stability of crude oil markets.
Saudi Arabia, the de facto leader of OPEC+, said it would voluntarily extend the 1 million barrels per day cut until the end of the second quarter, while Riyadh’s crude production will remain at around 9 million barrels per day until the end of June.
This move by OPEC+ could also be seen as a sign that demand expectations in the second quarter are less optimistic than the group thought.
OPEC+ ally Russia will also reduce its production and export supply by 471,000 barrels per day by the end of June. Moscow had volunteered to reduce its supply by 500,000 barrels per day in the first quarter. Other important actors Iraq and the UAE will also extend their voluntary production cuts of 220,000 barrels per day and 163,000 barrels per day, respectively, until the end of the second quarter.
This new move by OPEC+ demonstrates the strong unity within the group
The extension signals a strong commitment to achieving a floor price above $80 per barrel in the second quarter. However, if OPEC+ lifts the cuts quickly, oil prices may drop to around $77 per barrel in May.
Despite, the geopolitical chaos shaking the Middle East, which has reached the fifth month of the war in which Israel destroyed the Gaza Strip and killed more than 30 thousand people, OPEC + supply cuts, persistent Houthi naval attacks in the Red Sea increasing shipping costs oil prices have remained in a narrow range of $75-85 per barrel since the beginning of the year.
