Last week OPEC+ producers held a meeting in a video format to look through the strategy of the organization in 2024.

The members agreed to voluntarily cut oil production in the first quarter of next year to boost the market, but markets reacted to it the opposite.

The group met to discuss 2024 output amid forecasts the market faces a potential surplus and as a 1 million barrel per day (bpd) voluntary cut by Saudi Arabia was set to end next month.

Other member countries supported Saudia Arabia’s decision and they agreed to cut all production as well. The total curbs amount to 2.2 million bpd. Russia will cut 300,000 bdp, Iran 220,000 bdp, the UAE 163,000 and so on.

It is observed that the world, which has not yet fully recovered from the impacts of the COVID-19 pandemic and the Ukrainian war, is not ready to face the increase in oil prices and its possible effects.

Speaking to Azernews on the agenda, a British journalist and expert on energy issues Neil Watson said that 2.2million barrels is not enough to cause the increase in oil prices. He noted that here an important point is that if the organization cuts production further in the future.

“In my view, OPEC+ will not achieve its expressed objectives from this 2.2 million barrels per day cut. It seems apparent that it is an insufficient amount to spike worldwide demand in crude oil and there are questions to be asked about whether than OPEC+ can cut any more production in a vain attempt to boost barrel prices. Oil prices are very much reflecting the widespread view that those cuts can and will never be achieved. Since July, including the current production cuts, a reduction of nearly 5 million barrels per day has been implemented. Despite that, OPEC+ is being challenged to keep the price above the minimum acceptable of USD80 per barrel. Already there are murmurings of discontent amongst the OPEC+ members and I do not feel much more can be cut voluntarily,” Neil Watson said.

He also touched on the issues of the impacts of oil price increases globally and noted that there are two ways of looking at this situation. Obviously the economies of all oil-rich economies will be impacted and that has a downward multiplier effect on the economy. But, conversely, oil consuming countries will find that that the cost of fuel and energy reduces, and that will affect the currently heightened living costs across the Western World.

As for Azerbaijan, Neil Watson said that it could have negative effect for the country’s economy.

“Production will reduce and the barrel price will struggle to remain at USD80. There will be less incentive to exploit new oil resources. But Azerbaijan is correctly focusing on gas, and this will help its economy remain buoyant. Besides, it is correct to realise that oil demand will not last forever, and hence it has recentred its focus towards gas and is currently examining renewables and expansion of the non-oil economy. But it needs to strategise and implement its policies imminently - oil is the fuel of the 19th and 20th centuries - not the future,” Neil Watson said.