OPEC+ Extends Oil Production Cuts into 2025
On Sunday 2 June, OPEC+ announced that it will extend its oil production cuts until 2025. This decision exceeded market expectations, as the group seeks to stabilize the market amidst weak demand, high interest rates, and rising oil production in the United States.
Currently, oil prices are around $80 per barrel, which is below the level many OPEC+ members need to balance their budgets. Concerns about sluggish demand growth in China, the world’s largest oil importer, and increasing oil inventories in developed countries have also pressured prices.
Significant Production Cuts:
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, collectively known as OPEC+, have implemented significant production cuts since late 2022.
According to Reuters, OPEC+ members are currently cutting oil production by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.
OPEC+ Decisions
| Type of Cut | Amount of Cut | Previous End Date | New Extension |
|---|---|---|---|
| Production Cuts | 3.66 million bpd | End of 2024 | End of 2025 |
| Voluntary Cuts by 8 Members | 2.2 million bpd | End of June 2024 | End of September 2024 |
Timeline for Phased Reductions
| Period | Amount of Reduction | Duration |
|---|---|---|
| October 2024 | 2.2 million bpd | Start of gradual reduction |
| September 2025 | End of gradual reduction | Reductions to be phased out |
Three sources from OPEC+ stated that the group will gradually phase out the 2.2 million bpd cuts from October 2024 to the end of September 2025.
An OPEC+ delegate said
“Now the market has clarity for almost 1.5 years.”
Amrita Sen, co-founder of the Energy Aspects think tank said
“The deal should allay market fears of OPEC+ adding back barrels at a time when demand concerns are still prevalent.”
منبع OPEC+ Extends Oil Production Cuts into 2025 (aawsat.com)
