The decision to prolong significant production cuts underscores OPEC+'s commitment to
Faced with slow demand growth, high interest rates, and the rise in U.S. oil production, the group aims to support
OPEC+ is currently implementing cuts amounting to 5.86 million bpd, representing approximately 5.7 per cent of global demand.
This figure includes mandatory reductions of 3.66 million bpd, originally set to expire at the end of 2024, and voluntary cuts by eight members totaling 2.2 million bpd, which were initially scheduled to end in June 2024.
The mandatory cuts of 3.66 million bpd will now be extended until the end of 2025. Meanwhile, the voluntary cuts of 2.2 million bpd will be extended by three months, up to the end of September 2024.
Following this period, these voluntary reductions will be gradually phased out over the year, from October 2024 to September 2025.
Saudi Energy Minister
Specifically, OPEC+ is looking for lower interest rates and more consistent global economic growth, rather than isolated growth spurts, to ensure a stable market environment.
This scenario suggests a stock drawdown of 2.63 million bpd if the group's output remains at April's rate of 41.02 million bpd.
However, this drawdown is expected to decrease as the 2.2 million bpd voluntary cuts start phasing out in October 2024.
Contrasting
This discrepancy highlights the differing perspectives 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. (ANI)