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OPEC+ announces new plan to reduce oil production in order to compensate for the overproduction

OPEC+ announces new plan to reduce oil production in order to compensate for the overproduction

OPEC+ released a new schedule on Thursday for seven members nations to continue to cut oil production to compensate for pumping over agreed levels. This will be more than the monthly production increases the group plans to implement next month.

According to a table posted on the OPEC website, the plan calls for monthly cuts between 189,000 barrels a day and 435,000 bpd. The planned cuts will last until June 20,26.

OPEC+ (which includes OPEC, Russia, and other allies) has agreed to a series steps to support the global market. Since 2022, they have cut their output by 5,85 million bpd. This is equal to 5.7% of supply.

It confirmed on March 3 that eight members, including Russia, Saudi Arabia and the UAE, Kuwait, Oman Algeria, Kazakhstan, Iraq, would increase their monthly production by 138,000 bpd starting in April. The reason given was a healthier market.

Sources told us that the recent overproduction in Kazakhstan had angered the other members, and that this was one of the factors that led to the group's decision.

According to the revised plan, Iraq is expected to contribute the largest amount of compensation cuts, followed by Kazakhstan and Russia.

Saudi Arabia, which is one of the most steadfast members of the OPEC+ agreement, will also make small compensation cuts between 6,000 and 15,000 bpd for a three-month period.

Kazakhstan is producing at record levels as U.S. oil giant Chevron increases output at Tengiz, the largest Kazakh field.

According to recent OPEC data, Kazakhstan produced 1.767 millions bpd crude oil in February. This is up from 1.570million bpd during January. The OPEC+ quota for Kazakhstan was 1.468million bpd. (Editing by Kirsten Doovan and Mark Potter).

(source: Reuters)