Top OPEC+ committee urges compliance after major voluntary cuts announced

Participants in the existing OPEC+ crude production agreement should achieve full conformity with quotas, and adhere to the compensation mechanism, the joint ministerial monitoring committee overseeing the deal said after a meeting April 3.

The JMMC meeting took place after several members of the group announced voluntary plans for additional cuts April 2. Totaling 1.66 million b/d, the latest cuts will add to existing quotas and be in force from May until the end of 2023.

"The meeting noted that this is a precautionary measure aimed at supporting the stability of the oil market," OPEC said in a statement.

The cuts were not expected by market watchers, but follow a dip in oil prices in late March in response to fears of a new banking crisis hitting global economic growth and demand.

Platts -- part of S&P Global Commodities Insights -- assessed Dated Brent crude at its lowest for the year on March 20 at $71.705/b, after the collapse of Silicon Valley Bank in the US.

Prices showed significant gains in early trading April 3. At 0650 GMT the ICE June Brent futures contract was up $4.14/b (5.18%) from the previous close at $84.03/b, after earlier touching $86.44/b. It was back to $84.03 at GMT 1044, on concerns that high prices will increase inflation risks, and uncertainty over China's economic recovery.

Under the latest announcements, Saudi Arabia will cut 500,000 b/d, Iraq 211,000 b/d, the UAE 144,000 b/d, Kuwait 128,000 b/d, Kazakhstan 78,000 b/d, Algeria 48,000 b/d, Oman 40,000 b/d, and Gabon 8,000 b/d. The JMMC also confirmed that this will include an extension until year end of Russia's 500,000 b/d cut introduced from March.

In recent months OPEC+ production has been significantly below its targets, as the group grapples with punishing sanctions on Russia, outages and underinvestment. In February, the countries with quotas pumped a combined 1.913 million b/d below their caps, according to Platts survey of OPEC+ output by S&P Global Commodity Insights.

The JMMC is next scheduled to meet on June 4.