The Opec+ alliance has stuck to its production policy amid pressure from US President Donald Trump to lower crude prices by boosting output.
“The members of the JMMC [Joint Ministerial Monitoring Committee] reaffirmed their commitment to the DoC (Declaration of Co-operation), which extends to the end of 2026" as decided at the Opec and non-Opec members' ministerial meeting on December 5, the group said in a statement on Monday.
"The members of the JMMC who participated in the additional voluntary production adjustments plan announced [in] December ... [also] reaffirmed their commitment, noting that these additional voluntary production adjustments have ensured the stability of the oil market.”
Opec in December had announced that the voluntary oil production cuts of 2.2 million barrels per day, which began in November 2023, remain in place until the end of March. After that, the 2.2 million bpd supply curbs will be reduced gradually each month until September 2026 in a bid to ensure market stability,
The group of crude producers has held back 5.86 million bpd of output through a series of measures announced in 2022. These include a cap of 2 million bpd by the entire group, as well as 1.65 million bpd of a first stage of voluntary cuts by eight members – Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman – and another 2.2 million of second-stage voluntary cuts by the same countries.
After its meeting in December, the group also extended production cuts of 2 million bpd and 1.65 million bpd by a year, to the end of 2026.
Opec’s meeting comes after Mr Trump asked the group last month to lower crude prices, claiming cheaper oil could help end the war between Russia and Ukraine.
At the World Economic Forum in Davos, Mr Trump said: “I’m also going to ask Saudi Arabia and Opec to bring down the cost of oil. You got to bring it down, which, frankly, I’m surprised they didn’t do before the [US presidential] election.
“If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue."
Fuel prices and inflation are major concerns for the US public. Mr Trump vowed during his presidential campaign to bring down “the price of everything”.
However, lower prices could undermine his plan to focus on “drill, baby, drill”, a reference to boosting US oil production.
"US President Trump has called out for more oil production from Opec members, which fits with their announced plans, though the US government and Opec+ will differ on what levels are appropriate for prices," Edward Bell, acting group head of research and chief economist at Emirates NBD said ahead of the Opec+ meeting.
Oil prices also rallied ahead of the Opec announcement as traders weighed the potential consequences of Mr Trump’s move to slap tariffs on Canada, Mexico and China. The new levies that take effect from Tuesday have raised the prospects of a tit-for-tat trade war that played out during the first Trump presidency and disrupted global trade severely.
Brent, the benchmark for two-thirds of the world’s oil, rose to 2 per cent at $77.21 a barrel. West Texas Intermediate, the gauge that tracks US crude, was 2.95 per cent at $74.67 at 6.23pm UAE time.
Mr Trump has followed through on pledges made during his presidential campaign to impose a 25 per cent levy on goods imported from Canada and Mexico. The Trump administration has also imposed a 10 per cent tariff on Chinese goods, starting on Tuesday.
Canada and Mexico are two of the largest crude suppliers to the US market. Energy from Canada faces a reduced levy of 10 per cent, which includes about 4 million bpd of crude flows, as well as about 500,000 bpd from Mexico. The increased feedstock costs look set to translate to surging prices at the pump for US consumers, with the most active petrol futures soaring as much as 6.2 per cent in New York, according to Bloomberg data.
Both US neighbours as well as China have pledged to retaliate. However, there is a chance of a last-minute deal as Mr Trump said he would speak to Canadian Prime Minister Justin Trudeau on Monday. He also said he would “definitely” impose tariffs on the EU, to which the European bloc has said it would respond firmly.
"The near-term outlook for oil markets will be set by market reaction to US President Donald Trump’s imposition of tariffs on the key US trading partners of Canada, Mexico and China," Mr Bell said. "Canadian energy exports to the US received a lower tariff rate of 10 per cent (compared with 25 per cent for all other goods) to soften the blow of the new, higher cost to trade."
Crude oil prices have started the year on a volatile note, with US sanctions on Russia’s energy sector and cold weather pushing prices up. However, concerns about a US-China trade war and weak Chinese economic data have pulled back some of the early gains.
Crude imports from China, the main engine of oil growth for nearly two decades, have shown signs of cooling amid a slowdown in its economy and the rapid adoption of electric vehicles.
