OPEC+ formally agrees to cut oil production by 2 million barrels per day

The full OPEC+ group has agreed to cut crude oil production by its members by 2 million barrels per day from the month of November 2022.

This is as the rebound of oil prices continues with Brent crude trading at $93.25 per barrel and the American WTI trading at $87.71 per barrel as of Wednesday afternoon.

According to a statement from OPEC, the decision was taken after the 45^th meeting of the Joint Ministerial Monitoring Committee (JMMC) and the 33^rd OPEC and Non-OPEC Ministerial meeting on Wednesday, October 5, 2022, at the OPEC Secretariat in Vienna, Austria.

The output cut is coming on the heels of the uncertainty that surrounds the global economy and oil market outlooks and the need to enhance the long-term guidance for the oil market.

The group, at the meeting, adjusted the frequency of the monthly meetings of the Joint Ministerial Monitoring Committee to become every 2 months with the OPEC and non-OPEC Ministerial Meeting held every 6 months in accordance with the ordinary OPEC scheduled conference.

What OPEC was saying in the statement

The group also decided to grant the JMMC the authority to hold additional meetings or to request an OPEC and non-OPEC Ministerial Meeting at any time to address market developments if necessary.

The statement reads, ‘’The 45th Meeting of the Joint Ministerial Monitoring Committee (JMMC) and the 33rd OPEC and Non-OPEC Ministerial Meeting took place in person at the OPEC Secretariat in Vienna, Austria, on Wednesday, 5 October 2022. 

‘’In light of the uncertainty that surrounds the global economy and oil market outlooks, and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive, and preemptive, which has been consistently adopted by OPEC and Non-OPEC Participating Countries in the Declaration of Cooperation, the Participating Countries decided to:

1. Reaffirm 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.
2. Extend the duration of the Declaration of Cooperation until the 31st of December 2023
3. Adjust downward the overall production by 2 mb/d, from the August 2022 required production levels, starting November 2022 for OPEC and Non-OPEC Participating Countries as per the attached table.
4. Reconfirm the baseline adjustment approved at the 19th OPEC and non-OPEC Ministerial Meeting.
5. Adjust the frequency of the monthly meetings to become every two months for the Joint Ministerial Monitoring Committee (JMMC).
6. Hold the OPEC and non-OPEC Ministerial Meeting (ONOMM) every 6 months in accordance with the ordinary OPEC scheduled conference.
7. Grant the JMMC the authority to hold additional meetings, or to request an OPEC and non-OPEC Ministerial Meeting at any time to address market developments if necessary.
8. Extend the compensation period to the 31st of March 2023. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and Non-OPEC Ministerial Meeting.
9. Reiterate the critical importance of adhering to full conformity.
10. Hold the 34th OPEC and Non-OPEC Ministerial Meeting on 4 December 2022.

What you should know

There had been earlier reports that the idea of an oil production cut by OPEC and its allies had led to panic within the United States Government with White House officials and representatives meeting with influential members of the group from going ahead with such a decision.

The US had described the prospect of a production cut as a “total disaster” and warned that it could be taken as a “hostile act.”