A new twist of quotas

Sergey Kondratiev, Principal Director on Economic Studies at the Institute for Energy and Finance, commented to the Kommersant newspaper about the OPEC+'s decision to cut production in 2024.

The decision to reduce quotas for 2024 is important in terms of shaping the expectations of market participants, Sergey Kondratiev believes. More important for oil prices now, however, will be Saudi Arabia's voluntary curtailment of production from July 1. Brent prices are now likely to return to a comfortable level for most OPEC+ member countries above $80 per barrel, the expert believes.

The fact, that Russia since 2024 for the first time refused parity in the amount of quotas with Saudi Arabia is considered to be important by Kondratiev. Production in Russia has been lagging behind the quota since the spring of 2022, but formally Moscow previously had the right to increase it. In addition, the analyst notes that there is a discussion, including among members of OPEC +, about the reliability of data on the volume of oil production in Russia:

“For the first time in a press release following the meeting, we see an indication that the production data of one of the parties to the agreement are being discussed with independent agencies and may be revised.”