LONDON/DUBAI: In a move to stabilize the oil market, OPEC+ has decided to extend its substantial oil output cuts well into 2025. This decision, announced on Sunday, comes amid concerns over sluggish demand growth, particularly from top oil importer China, high interest rates, and increasing competition from U.S. production.
Recently, Brent crude oil prices have hovered around $80 per barrel, a figure lower than many OPEC+ members require to balance their budgets. Factors contributing to this price include slow demand growth in China and rising oil stocks in developed economies.
OPEC+, comprising the Organisation of the Petroleum Exporting Countries and allies led by Russia, has implemented a series of significant output cuts since late 2022. Currently, the group is reducing output by a total of 5.86 million barrels per day (bpd), approximately 5.7% of global demand. This includes 3.66 million bpd of cuts set to expire at the end of 2024, and voluntary cuts by eight members totaling 2.2 million bpd, which were due to expire at the end of June 2024.
The recent agreement extends the 3.66 million bpd cuts by one year until the end of 2025, and prolongs the 2.2 million bpd voluntary cuts by three months, now set to expire at the end of September 2024.
