Opec+ Extends Deep Oil Output Cuts Deep Into 2024

Opec+ has announced a continuation of its substantial oil output cuts through 2024, with potential extensions into 2025, as the alliance aims to support the market against the backdrop of weak global demand growth, elevated interest rates and rising US production. 

Currently, oil prices hover around USD 80 per barrel, a figure insufficient for many Opec+ members to achieve budgetary balance. The persistent worries over slow demand growth in China, the world’s largest oil importer, have further weighed on prices.

The current cuts involve a total reduction of 5.86 million barrels per day (bpd), approximately 5.7 per cent of global demand. This includes 3.66 million bpd from OPEC+ members, effective until the end of 2024, and an additional 2.2 million bpd from voluntary cuts by some members, which were set to expire at the end of June 2024. 

On Sunday, Opec+ agreed to extend the voluntary cuts of 2.2 million bpd into the third quarter of 2024. Ongoing discussions suggest the possibility of extending some of the 3.66 million bpd cuts into 2025.

The countries implementing deeper voluntary cuts beyond the agreed amounts include Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates. Key ministers from these nations convened in Riyadh, Saudi Arabia, for a series of meetings, with other ministers participating online.

(Inputs from Reuters)