Minister: OPEC+ decision on oil production cut to support stability in oil market

By Azernews

By Ayya Lmahamad

OPEC plus decision to cut daily oil production is aimed at supporting stability in the oil market, Azerbaijan’s Energy Minister Parviz Shahbazov said, commenting on the Declaration of Cooperation adopted by the OPEC plus countries on October 5, Azernews reports.

“In recent days, there have been different opinions that the decision of OPEC plus to cut daily oil production by 2 million barrels since November will lead to a deficit in the oil market. I believe that OPEC plus, as always, this time adopted such a decision in order to support stability in the oil market,” he said.

The minister noted that currently the supply and demand in the oil market have been affected by numerous factors.

“It’s predicted that the oil demand will decrease. In such a situation, the decision to intervene with the output is inevitable. OPEC plus took such a step based on its experience in order to maintain the balance in the market,” he said.

Noting that this is a decision made on the basis of a consensus, not arising from the individual interest of any country, the minister added that all decisions of OPEC plus are based on stability in the market.

“The results and achievements gained so far in complex situations are undeniable proof of this,” he said.

Moreover, Parviz Shahbazov stressed that today the major threat to the balancing and stability of the market is not controlled cuts, but natural reductions in production, which are impossible to control.

“I think that today we must worry not about the reduction amounts announced by OPEC plus but, naturally, the trend towards a decrease in the production,” he said.

The minister underlined that the latest decision of OPEC plus is aimed at attracting investment flows, compensating for the expected negative mood, which is an important step in the future to prevent oil shortages and price volatility.

Since April 2020, OPEC and non-OPEC countries have entered into an agreement on the reduction of daily oil output volumes.

At the 19th Ministerial Meeting of OPEC and non-OPEC countries, Azerbaijan supported the decision to increase daily crude oil output by 400,000 barrels per month in August-December 2021 and to extend the Declaration of Cooperation until late 2022, with partial adjustments to the base level of oil production from May 2022.

From May 2022 till the end of the year, the calculation of Azerbaijan's oil production obligations is to be continued on the basis of the existing level.

Additionally, Azerbaijan has supported the decision of OPEC plus to cut daily crude oil output by 2m barrels from November 2022 taken during the 33rd Ministerial Meeting of OPEC and non-OPEC members. The new commitments of the participating countries of the Declaration of Cooperation were determined based on their quotas in August 2022. The term of the agreement was extended until December 31, 2023.