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The latest extension of OPEC+’s ongoing output cuts will see a further 471,000 bpd of crude exports taken offline by Russia in Q2. The syndicate’s pledged curbs, originally implemented in 2022, are now equivalent to 5.7% of the world’s oil demand. Ongoing reductions from key producers has narrowed OPEC+’s grip on the global crude market and benefited North American drillers that are still producing at levels consistent with the start of the decade.

Weekly US field production of crude oil is largely on par with pre-pandemic levels of output and a wave of consolidation among big oil firms may keep it that way for some time. Additionally, US natural gas producers are now preparing to implement production cuts to rein in oversupply and revive tumbling prices.

Related ETF: Energy Select Sector SPDR Fund (XLE)

Over the weekend, the syndicate of OPEC+ members led by Saudi Arabia and Russia agreed to extend ongoing voluntary oil output cuts of 2.2 million barrels per day (bpd) into Q2. Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman will also be continuing reductions in smaller amounts. Moscow will cut its oil production and exports by an extra 471,000 bpd in the second quarter, compounding a material drop in fuel supplies flowing out of the country recently. As MRP noted last week, a recent wave of Ukrainian drone attacks on the Russian mainland, primarily targeting oil refineries and storage facilities, have likely played a part in reducing the country’s refining capacity by hundreds of thousands of barrels per day, as well as the implementation of a six-month gasoline export ban.

Pledged reductions since OPEC+ countries began a regime of output cuts in 2022 are equivalent to nearly 5.9 million bpd. That is equivalent about 5.7% of daily world demand, according to Reuters calculations. These cuts, meant to suppress the expansion of global stockpiles and keep energy prices at elevated levels while demand growth slows, have watered down OPEC+’s collective grip on global crude markets. Per Rystad Energy, the latest production-cut decisions by OPEC+ will bring its market share for oil production down to 33.9% in June. That’s down from 41.4% just four years ago. Though Brazil joined OPEC+ in January, bringing with it 2.2 million bpd of crude output, Angola simultaneously defected from the alliance, halving the net gain in bpd OPEC+ had received from Brazil’s membership.

The US energy industry has likely been the primary beneficiary of lower oil output from OPEC+, raising the country’s…

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