OPEC+ sticks to oil production cut strategy

The outcome of the Riyadh meeting was broadly in line with analysts’ expectations and is not welcome news for tanker owners.

However, despite the OPEC+ strategy, tanker markets are in positive territory at present with analysts suggesting that rates are likely to strengthen further in the weeks ahead, mostly because of increases in non-OPEC+ production.

The deep oil output cuts of 3.66 million barrels per day that are currently in place until the end of 2024 will now stay in place until the end of 2025. The additional 2.2m bpd of voluntary cuts have ben extended for a further three months until the end of September.

Russia has indicated that it may implement further production cuts. According to some analysts, if the country  proceeds with this strategy, there could be a global crude deficit of 600-800,000 bpd by the end of the year.

Producers would, of course, like to see firmer prices which some analysts had suggested were likely, in any case, as a result of the worsening geopolitical situation. However, early on Monday morning, Brent crude was trading at $81.25 and West Texas Intermediate at $77.11.