The energy ministers of the most influential OPEC+ producers presented a united front on Thursday, seeking to allay market concerns about oversupply and saying that the oil production plans unveiled this weekend could always be amended or reversed.
The OPEC+ group extended this weekend most oil output reductions into 2025. But it also said it could begin unwinding some voluntary cuts after the end of the third quarter of 2024-subject to market conditions.
The potential of OPEC+ barrels coming on the market in the fourth quarter of the year weighed on oil prices, which slumped by 5% in the two days following the group's announcement on Sunday.
Most analysts have commented the alliance's announcement is bearish for oil prices because of the plan to begin unwinding some of the cuts. Most analysts don't think there would be market conditions for the group to begin gradually adding supply in the fourth quarter of 2024, either.
Following the oil sell-off on Monday and Tuesday, the energy ministers of Saudi Arabia and the United Arab Emirates (UAE), as well as Russia's top oilman and deputy prime minister, sought to reassure the market on Thursday that OPEC+ knows what is doing and that the market will soon realize the group has done "the right thing."
"It's a year and a half agreement, it has all the mechanics, some of the mechanics are not new, we have also exercised it before," Saudi Energy Minister Prince Abdulaziz bin Salman said at the St Petersburg International Economic Forum, as quoted by Reuters.
"Especially this issue of pausing or reversing," the Saudi minister added.
Russia's Deputy Prime Minister Alexander Novak said that "OPEC's decision this weekend is positive for the oil market and helps stabilize it."
The UAE's Energy Minister, Suhail Al Mazrouei, noted at the same event in Russia, "Sometimes the market doesn't understand decisions. It takes time to analyze."
By Charles Kennedy for Oilprice.com
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