Brazil joining OPEC+ as of next year

Brazil joining OPEC+ as of next year

Effective Jan. 1, 2024, South America’s largest country will join the Organization of Petroleum Exporting Countries (OPEC), Brazil’s Minister of Mines and Energy Alexandre Silveira announced this week after participating virtually in a meeting with other colleagues from the bloc.

 “The meeting welcomed H.E. Alexandre Silveira de Oliveira, Minister of Mines and Energy of the Federative Republic of Brazil, who will join the OPEC+ Letter of Cooperation as of January 2024,” an OPEC statement read.

The “Letter of Cooperation” is the founding document of the OPEC+ alliance, signed in 2016. Brazil, which is currently the largest Latin American oil producer, will become the 24th partner and the third in the region, together with Mexico and Venezuela, one of the five countries that founded OPEC back in 1960 together with Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. It was later joined by Libya (1962), United Arab Emirates (1974, Abu Dhabi 1967), Algeria (1969), Nigeria (1971), Angola (2007), Gabon (1975-1996 and 2016), Equatorial Guinea (2017) and the Republic of Congo (2018). This alliance accounts for almost 40% of the world’s crude oil supply and is deeply involved in output readjustments to stabilize global prices. Since 2016, an expanded version of the alliance, known as OPEC+, was created with the accession of Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.

The South American country’s offshore fields totaled 3.67 million barrels per day last September, according to OPEC data, surpassing that of Venezuela, the only member of the oil cartel today, after the withdrawal of Ecuador in 2020. “President Lula confirmed our entry into the OPEC+ cooperation council,” said Silveira de Oliveira in a video announcement.

The group also reportedly foresees moderate quota cuts for Angola, Congo and Nigeria in 2024, while other partners are expected to announce further voluntary, i.e. non-binding, cuts on their own from January, while Riyadh and Moscow are expected to extend their cuts beyond December 31.

Brazil’s accession was announced a day after President Luiz Inácio Lula da Silva visited Riyadh, where he was welcomed by Saudi Crown Prince Mohammed bin Salman.