OPEC+ agreed on Sunday to extend most of its deep oil output cuts for 2024 but to start phasing them out in 2025, as the group seeks to shore up the market amid tepid global demand growth, high interest rates and rising rival U.S. production.
Oil prices trade near $80 per barrel, below what many OPEC+ members need to balance their budget. Worries over slow demand growth in top oil importer China have weighed on prices alongside rising oil stocks in developed economies.
The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, have made a series of deep output cuts since late 2022.
OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.
The cuts include 2 million bpd by all OPEC+ members, the first round of voluntary cuts by nine members of 1.66 million bpd, and the second round of voluntary cuts by eight members of 2.2 million bpd.
OPEC+ extended the the first round of cuts until the end of 2025 from the end of 2024, the group said in a statement.
It also agreed to extend the third round of voluntary cuts into the third quarter of 2024, OPEC+ sources said, adding that more details were being worked out and would be announced on Sunday.
Moreover, it emphasizes the importance of flexibility and foresight in navigating volatile market conditions.
Furthermore, the decision underscores OPEC+’s role as a key player in shaping the trajectory of the global oil industry.
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