The oil-producing countries made a common decision to reduce production by two million barrels per day.
Deputy Prime Minister Alexander Novak co-chaired the 33rd OPEC and non-OPEC Ministerial Meeting. The participating countries noted the uncertainty in global economic markets, thus, a unanimous decision was made to reduce oil production by 2 million barrels per day from the August 2022 required production levels to increase long-term stability. The decision comes into force in November 2022. The Declaration of Cooperation between the OPEC and non-OPEC countries has been extended until 31 December 2023.
“We will work together until the end of next year, because this tool created for the interaction of 23 oil-producing countries has proven effective. We carefully analysed the current situation and saw much volatility in terms of supply and demand in the oil market. It was decided to balance the market by reducing production. We traditionally see a decrease in demand for oil in world markets in the winter. This decrease averages about 2.5 million to 3 million barrels per day,” Alexander Novak explained to reporters after the meeting.
According to the Deputy Prime Minister, the decision to significantly reduce oil production is connected with a possible recession expected in 2023 in the economies of the leading consumers, including the European Union and the United States. This is due to rising refinancing rates, inflation and energy prices. A slowdown in the global economy could lead to a reduction in both the consumption of raw materials and investment in the oil and gas industry. The forecast for a decrease in Russian oil production is less significant – in 2023 it will be 93-94 percent of 2022 levels.
The parties agreed to adjust the frequency of the Joint Ministerial Monitoring Committee meetings to every two months. The next OPEC and non-OPEC Ministerial Meeting is scheduled for 4 December 2022.
