(Bloomberg) -- Brazil will join the cooperation charter of the OPEC+ oil alliance, a move that won't bind it to making production cuts.
Brazilian Energy Minister Alexandre Silveira told a meeting of the group on Thursday that the country would join its charter from next year. The charter, open to all oil producing countries, doesn't bind signatories and provides a platform for dialog and exchange of views.
“President Lula confirmed our entry into the OPEC+ cooperation charter from January 2024,” the minister told the group, according to a video circulated by delegates. He was met with a round of applause.
A Brazilian official had said earlier that the country was still considering the invitation. It's not clear joining the cartel's output policy would be in Brazil's interests: it is one of the world's most significant sources of new supply growth and OPEC+ is currently squeezing production.
“Brazil joining OPEC+ is a bit like an up-and-coming Olympic sprinter joining a power-walking league — the rules aren't set up for long-term success,” said Schreiner Parker, managing director for Latin America at Rystad Energy AS. “Sacrificing market share for price control is a necessary evil in Saudi Arabia right now, but not so for Brazil.”
The Latin American giant exported an averaged of 1.8 million barrels of oil daily in the third quarter, an increase of 40% from a year earlier, according to official data. Better-than-expected production growth from Brazil and the US is helping to lift daily global supplies by 1.7 million barrels this year to a record, according to the International Energy Agency.
Read More: OPEC+ Agrees on Deeper Output Cuts to Avoid Renewed Surplus
Relations between Brazil and OPEC+ have strengthened under President Luiz Inacio Lula da Silva, a leftist who seeks to represent the developing world at large. Petrobras Chief Executive Officer Jean Paul Prates traveled to Vienna in July to take part in a cartel seminar and in October, OPEC Secretary General Haitham Al-Ghais met with Lula and other officials in Brazil.
State-controlled oil giant Petrobras declined to comment on what it said was a government decision.
Read More: OPEC+ Cuts Lack Substance, Brazil Invite Unlikely to Flourish
--With assistance from Mariana Durao and Peter Millard.
(Updates with analyst's comment in fifth paragraph, Petrobras reaction in final paragraph.)
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