Eight OPEC+ countries announced on Monday that they would extend the oil production cut until the end of next December.
The countries, namely Iraq, Russia, Saudi Arabia, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and the Sultanate of Oman, said in a statement that they “agreed to extend for one month the additional voluntary production cut of 2.2 million barrels per day.”
The decision aims to prevent the market from being flooded with supply and prices from falling, while the price of US West Texas Intermediate crude and Brent crude is around $70 per barrel amid no growth in demand and an acceleration in supply.
OPEC, led by Saudi Arabia, formed the OPEC+ alliance in 2016 with other countries, including Russia, to deal with the challenges posed by US competition.
This alliance currently has 22 members, who are cutting production by about six million barrels per day, either based on a decision taken at the alliance level or through additional voluntary restrictions.
OPEC+ ministers are due to meet in Vienna, where OPEC is based, in early December. But Sunday’s announcement confirms that the eight countries that extended production cuts will not abandon current cuts to oil output before the start of 2025.
Thus, the voluntary cuts will begin to be lifted at least three months later than the date set at the last ministerial meeting in early June, when OPEC and its allies announced their desire to increase production starting in October.
But the group left a way out at the time, noting that this decision is subject to review at any time.
Global oil demand growth has been declining for months due to a slowdown in the economy in China, the world’s second-largest consumer and the main driver of global oil demand growth, and in the United States, which is awaiting the results of the presidential elections scheduled for Tuesday.
