OPEC and its allies initiated a reduction in oil production last month, aligning with their strategy to address the decline in global crude prices. According to a Bloomberg report, a comprehensive analysis of shipping data, official estimates, and insights from energy consulting firms revealed that OPEC+ collectively decreased output by 490,000 barrels per day in the past month, reaching 26.57 million barrels. Notably, Iraq and Kuwait accounted for half of this reduction.

Iraq, contributing significantly to the cut, lowered its daily output by 130,000 barrels, reaching 4.2 million barrels per day. However, Iraq still exceeds its agreed production level by approximately 200,000 barrels per day. The planned cuts from OPEC members were not the sole contributors to the output decline. About 25% of the reduction was attributed to disruptions arising from the shutdown of Libya's largest oil field. The ambiguity surrounding Russia's cuts also played a role, as the country shipped less oil but increased the export of other fuel products.

The International Energy Agency predicts a global oil supply increase of 1.5 million barrels per day in the current year, reaching a record 103.5 million barrels per day. This surge is driven partly by unprecedented production levels in the United States, Brazil, Guyana, and Canada. Output growth in 2024 is anticipated to be dominated by non-OPEC+ countries.

As 2024 unfolds, mounting geopolitical tensions in the Middle East add further uncertainty to the markets. Houthi militants have targeted cargo ships in response to Israel's actions in Gaza, causing disruptions. Despite military interventions by the US and UK in Yemen, missile and drone strikes persist on commercial vessels. Concerns over safety have led major companies to opt for longer routes, avoiding the Red Sea and the Suez Canal. The resulting supply chain disruptions raise fears of increased shipping costs, potentially triggering another round of global inflation in 2024.