The Organisation of Petroleum Exporting Countries (OPEC) and its allies on Monday agreed to cut monthly oil output by 100,000 barrels per day in October. OPEC disclosed this at its 32nd OPEC and non-OPEC ministerial meeting, according to a statement released by the organisation. It noted the adverse impact of volatility and the decline in liquidity on the current oil market and the need to support the market’s stability.
The development came after Brent crude dropped below $100/barrel in August, on fears that major economies were falling into recession, with ripple effect on energy demand. OPEC had last month agreed to raise oil output by 100,000 barrels per day. Analysts say the small increase is not likely to push down surging energy prices that have stoked inflation globally. The increase comes weeks after U.S. President Joe Biden visited Saudi Arabia in a bid to try to get big oil producers to pump more crude to cut prices.
On Monday, OPEC noted that higher volatility and increased uncertainties require the continuous assessment of market conditions and a readiness to make immediate adjustments to production in different forms if needed.
It added that OPEC+ has the commitment, the flexibility, and the means within the existing mechanisms of the Declaration of Cooperation to deal with these challenges and provide guidance to the market.
The oil cartel said it reaffirmed the decision of the 10th OPEC and non-OPEC Ministerial Meeting on 12 April 2020 and further endorsed it in subsequent meetings including the 19th OPEC and non-OPEC Ministerial Meeting on 18 July 2021.
“Revert to the production level of August 2022 for OPEC and non-OPEC Participating Countries for the month of October 2022 as per the attached table, noting that the upward adjustment of 0.1 mb/d to the production level was only intended for the month of September 2022.
“Request the Chairman to consider calling for an OPEC and non-OPEC Ministerial Meeting anytime to address market developments, if necessary.
“Reiterate the critical importance of adhering to full conformity and the compensation mechanism. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting,” it said.
The body further announced that its next meeting will be held in October.