Oil prices are expected to rise in the new year after some OPEC+ oil producers voluntarily pledged to cut output.
The oil cartel on Thursday released a statement that did not formally endorse production cuts, but individual countries announced voluntary reductions totaling 2.2 million barrels per day for the first quarter of 2024.
Leading the cuts is OPEC kingpin and largest member Saudi Arabia. Riyadh agreed to extend its voluntary production cut of 1 million barrels per day — which has been in place since July — until the end of the first quarter of 2024. Russia said it will cut supply by 300,000 barrels per day of crude and 200,000 barrels per day of petroleum products over the same period.
Iraq is cutting by 223,000 bpd, the United Arab Emirates by 163,000 bpd, Kuwait by 135,000 bpd, Kazakhstan by 82,000 bpd, Algeria by 51,000 bpd and Oman by 42,000 bpd.
“Compliance is key. It can’t just be Saudi Arabia. We have to have compliance from the other OPEC nations,” Bill Perkins, CEO and head trader of Skylar Capital Management, told CNBC. “When these other nations say they’re going to cut, the market doesn’t trust it as much,” he added.