New Delhi [India], OPEC+ has announced to extend its substantial oil production cuts till 2025 in an aim to stabilize the market amid sluggish demand growth, increased interest rates and rising US oil production. The group will maintain its current cut of 5.86 million barrels per day (bpd), with specific cuts being extended and phased out.
The decision to pursue significant production cuts underlines OPEC+'s commitment to market stabilization.
Faced with slow demand growth, high interest rates and rising US oil production, the group aims to support oil prices by tightly managing supply.
OPEC+ is currently implementing cuts of 5.86 million bpd, about 5.7 percent of global demand.The figure includes mandatory cuts of 3.66 million bpd, which were originally scheduled to expire at the end of 2024, and voluntary cuts by eight members totaling 2.2 million bpd, which were initially scheduled to expire in June 2024.
Mandatory cuts of 3.66 million bpd will now be extended to the end of 2025. Meanwhile, voluntary cuts of 2.2 million bpd will be extended by three months to the end of September 2024.
After this period, from October 2024 to September 2025, these voluntary deductions will be gradually phased out.
Saudi Energy Minister Prince Abdulaziz bin Salman stressed that the group's strategy is to wait for more favorable economic conditions before changing its production approach.Specifically, OPEC+ is looking for lower interest rates and more consistent global economic growth rather than varying growth pace to ensure a stable market environment.
OPEC estimates OPEC+ crude oil demand in the latter half of 2024 to average 43.65 million bpd.
This scenario suggests a decline of 2.63 million bpd in stocks if the group's production remains at April's rate of 41.02 million bpd.
However, this decline is expected to ease with the 2.2 million bpd voluntary cut being phased out in October 2024.
In contrast to OPEC's forecasts, the International Energy Agency (IEA) estimates that OPEC+ oil demand, combined with stock levels, will be significantly lower in 2024, averaging 41.9 million bpd.This discrepancy highlights the differing views on future market dynamics between oil producers and consumers.
The extension of production cuts by OPEC+ reflects a strategic move to manage supply and support oil prices amid uncertain economic conditions.
The decision to pursue significant production cuts underlines OPEC+'s commitment to market stabilization.
Faced with slow demand growth, high interest rates and rising US oil production, the group aims to support oil prices by tightly managing supply.
OPEC+ is currently implementing cuts of 5.86 million bpd, about 5.7 percent of global demand.The figure includes mandatory cuts of 3.66 million bpd, which were originally scheduled to expire at the end of 2024, and voluntary cuts by eight members totaling 2.2 million bpd, which were initially scheduled to expire in June 2024.
Mandatory cuts of 3.66 million bpd will now be extended to the end of 2025. Meanwhile, voluntary cuts of 2.2 million bpd will be extended by three months to the end of September 2024.
After this period, from October 2024 to September 2025, these voluntary deductions will be gradually phased out.
Saudi Energy Minister Prince Abdulaziz bin Salman stressed that the group's strategy is to wait for more favorable economic conditions before changing its production approach.Specifically, OPEC+ is looking for lower interest rates and more consistent global economic growth rather than varying growth pace to ensure a stable market environment.
OPEC estimates OPEC+ crude oil demand in the latter half of 2024 to average 43.65 million bpd.
This scenario suggests a decline of 2.63 million bpd in stocks if the group's production remains at April's rate of 41.02 million bpd.
However, this decline is expected to ease with the 2.2 million bpd voluntary cut being phased out in October 2024.
In contrast to OPEC's forecasts, the International Energy Agency (IEA) estimates that OPEC+ oil demand, combined with stock levels, will be significantly lower in 2024, averaging 41.9 million bpd.This discrepancy highlights the differing views on future market dynamics between oil producers and consumers.
The extension of production cuts by OPEC+ reflects a strategic move to manage supply and support oil prices amid uncertain economic conditions.
