OPEC+ Announces New Plan to Cut Oil Production to Make Up for Producing Too Much Before
On Thursday, OPEC+ (a group of oil-producing countries) shared an updated plan. Seven member countries, including Russia, Kazakhstan, and Iraq, are being asked to cut their oil production even more because they produced too much earlier.
OPEC+ Oil Production Cuts
OPEC+ shared a new plan to cut oil production. The cuts will range from 189,000 to 435,000 barrels per day (bpd) each month and will last until June 2026.
Even with these new cuts, OPEC+ will still slightly increase production by 138,000 bpd in April. This is part of their plan to slowly undo past production cuts. Earlier this month, OPEC+ members agreed to go ahead with this small increase, which is the first one since 2022.
Some OPEC+ countries have been producing more oil than allowed, so the group decided to adjust production levels to keep the oil market steady.
These moves show that OPEC+ is serious about keeping oil prices stable, especially since global demand and economic conditions have been unpredictable lately.
In December, OPEC predicted that oil demand in 2025 will grow by 1.45 million bpd, which is slightly lower than the earlier estimate of 1.54 million bpd. This shows they are carefully rethinking what will affect oil demand in the coming years.
Oil Prices
Oil prices went up because of new US sanctions on Iran (an OPEC member) and growing tensions in the Middle East. These concerns outweighed the impact of a stronger US dollar.
Iran produces more than 3 million bpd of oil. If the sanctions become stricter, Iran’s oil exports could fall, reducing the global oil supply and pushing prices higher.
As of Thursday night:
- Brent crude oil went up by 1.70% to $71.98 a barrel.
- US West Texas Intermediate (WTI) crude oil rose by 1.65% to $68.27 a barrel.
The US Treasury announced new sanctions on two Chinese petrochemical companies. These companies are accused of buying and storing Iranian oil, which violates US rules. This move is part of the US’s effort to reduce Iran’s oil sales under its “maximum pressure” policy.
The companies sanctioned are:
- Huaying Huizhou Daya Bay Petrochemical Terminal Storage – penalized for storing Iranian oil on a banned ship.
- Luqing Petrochemical – penalized for buying Iranian oil transported on ships linked to the Houthis and Iran’s military.
This is the first time the US has sanctioned a Chinese “teapot” refinery (small private refinery), like Luqing Petrochemical. These refineries are the biggest buyers of Iranian oil and help Iran avoid US sanctions.
Published: 21th March 2025
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