Brazil unlikely to be ready to immediately support OPEC+ in cutting oil output — experts
Brazil was the world's seventh largest oil producer in 2022, with production at 3.022 million barrels per day, according to OPEC data
MOSCOW, December 1. /TASS/. Brazil is unlikely to be ready to immediately support the actions of the OPEC+ alliance and participate in oil production cuts, experts interviewed by TASS said.
On Thursday, the OPEC+ ministerial meeting decided not only to go on with of further oil production reduction policy, but to a new member to the alliance - Brazil. Its accession to the OPEC+ Cooperation Charter is expected from January 2024.
Brazil was the world's seventh largest oil producer in 2022, with production at 3.022 million barrels per day, according to OPEC data.
Vasily Karpunin, head of the information and analytical content department at BCS World of Investments, noted that Brazil’s share in the world market is 3.5-4%. According to him, a larger number of countries operating within the same oil production policy increases the significance of the decisions taken by OPEC+. However, the expert believes that for now Brazil is unlikely to support OPEC+ actions.
"It is unlikely that in 2024 the country will immediately be integrated into the production quota mechanism and will begin to reduce or strictly limit the production limit," he said.
Sergey Kondratyev, head of the sector of the economic department of the Institute of Energy and Finance, agrees with this view. The expert believes that for some time Brazil may act as an observer in OPEC+. He also admits that in the future, both Brazil and OPEC+ will be interested in establishing closer cooperation.
"The accession of new participants will increase the market share of OPEC+ and increase the influence of the parties to the agreement on the market situation, allowing them to more effectively deal with existing challenges," the expert added.
Kasatkin Consulting partner Dmitry Kasatkin reiterated that the larger the OPEC+ share in the world market, the stronger the influence of the alliance. In his opinion, Brazil needs to have tools to minimize risks and maximize the effect of oil exports. By consolidating similar interests of other countries OPEC+ can be helpful in this regard.
"In the current situation, most likely, Brazil will not voluntarily reduce production, but plans for its growth in 2024 may be adjusted. In the event of serious shocks on the market, the country will join the policies of other members [OPEC+]," the expert said.